What you need to know about getting a home loan in Sydney

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Sydney is where much of the property market growth in Australia is concentrated, and in recent years it has experienced increasing prices. It’s good news for property owners, who have seen their homes explode in value, but what about property seekers? What can you expect when you take out a home loan in Sydney?

Let’s take a look.

Increasing mortgage values

According to CoreLogic, the median house price in Sydney was $795,000 at the end of February 2017 – well above values in all other Australian capitals. Sydney is – no big surprises here – an expensive place to buy or invest, a drawback for first home buyers.If you're planning to take out a home loan in Sydney, you're in for high median values, but it's still possible to find an affordable mortgage.If you’re planning to take out a home loan in Sydney, you’re in for high median values, but it’s still possible to find an affordable mortgage.

“The strong growth conditions across Sydney have provided a substantial wealth boost for home owners; however, the flip side is that housing costs are becoming increasingly out of reach,” CoreLogic head of research Tim Lawless told Business Insider on 1 March.

Currently, 167.7 per cent of household income is needed for a 20 per cent deposit on a Sydney home, according to CoreLogic stats. This is up from 139.8 per cent in 2011 and 116.8 per cent in 2001.

On top of this, CoreLogic’s most recent Housing Affordability Report indicates that stamp duty costs on average-priced homes in Sydney are above $30,000. Interest rates are also rising as banks and lenders push them up, despite the official cash rate remaining at an all-time low of 1.5 per cent.

Higher incomes

However, median annual incomes in Sydney are much higher than they used to be. They’re currently at $93,593, compared to $75,088 in 2011, according to CoreLogic’s latest data.

The stats also indicate that the proportion of household income required to pay off a Sydney mortgage is actually lower today than it was five years ago.

Potentially large capital gains in outer suburbs

However, while inner city suburbs will price many buyers and investors out of the market, there are plenty of Sydney suburbs where mortgages are less expensive. The Greater Western Sydney area remains much more affordable and will experience exponential growth in coming years, due to massive infrastructure developments and billions of dollars’ worth of government investment.Areas outside the inner city at such as Western Sydney will witness explosive property growth over the next decade.Areas outside the inner city such as Western Sydney will witness explosive property growth over the next decade.

If you’re looking to take out a home loan but find that prices are too expensive close to the city, why not consider a growing area further out? This option could bring you considerable capital gains in coming years.

You can contact a Smartline Mortgage Adviser on 13 14 97 for mortgage advice. Or complete our call request form and we’ll call you!

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