By Erinna Giblin
Some of Australia’s most exclusive suburbs might seem out of reach for many home buyers, but new data has revealed it’s possible to buy a house in some of the country’s most prized neighbourhoods at a fraction of the cost – if you know where to look.
After all, who wouldn’t want to live in a champagne suburb on a prosecco budget?
A new dataset from realestate.com.au compares the median estimated house valuation for various micro suburbs (ABS’ SA1 regions) within the same suburb. A property’s valuation could be influenced by its own sales history and/or valuations of similar houses in neighbouring pockets. All median estimated valuations are current as of September 2020.
Most premium suburbs have more affordable pockets, but there is usually a good reason for the cheaper price tag, according to realestate.com.au’s executive manager of economic research Cameron Kusher.
“Factors such as block size, proximity to amenity and shops, town planning rules and proximity to major roads or transport infrastructure can greatly impact the value of a property within a suburb,” Mr Kusher said.
He said homes close to the water or with water views carry much greater values than similar properties without the same vantage point.
“It really highlights that being in or close to the water is something that many luxury home owners have a preference for, and they will pay a significant premium for that luxury.”
For home buyers willing to forgo space and land, apartment and unit living is a sure-fire way to buy into a prestigious suburb, Mr Kusher added.
“If you are on a budget and have a desire to be in a specific suburb, then buying into these more affordable pockets or purchasing a unit or townhouse as opposed to a house is usually a more cost-effective option,” he said.
Melbourne-based buyer’s advocate Cate Bakos said research is key when considering more affordable properties because location could end up costing you in the long run.
She said home buyers may find themselves relying on their car a lot more and potentially lamenting their more fortunate neighbours who have everything within walking distance.
“The reality is, when you buy in a bargain location you will one day be faced with selling in a bargain location. When it comes to selling, there could be difficulty with finding interested buyers, particularly in a down market,” Ms Bakos explained.
She added busy roads, train lines and boom gates can also negatively impact the value of a home.
Prestigious suburbs with the biggest median house valuation differences
Popular Sydney waterside suburbs showed the largest differences in median estimated house valuations nationally, according to the realestate.com.au data, with esteemed Rose Bay recording the biggest gap at $11.5 million.
The most expensive houses in Rose Bay were located close to the water, around Tivoli Avenue and Dumaresq Road, with a median estimated house valuation of $13.7 million, while houses in the pocket around Onslow Street Reserve and Rose Bay Secondary College were more modestly valued at around $2.2 million.
The overall median estimated house valuation in Rose Bay was $3.7 million.
According to local agent Jordan L’Estrange, Rose Bay has two property markets separated by a golf course.
“You’ve got Beresford Crescent and Belfour Road on one side where there are plenty of entry-level, foot-in-the-door units, which can sell for around the $750k mark, perfect for first home buyers,” Mr L’Estrange said. “Then you’ve got your Churchill Street and New South Head Road, in which we regularly sell homes around the $10 million mark.”
Mr L’Estrange said investment prospects are strong anywhere in Rose Bay.
“You’ve got proximity to water, the ferries, a village lifestyle perfect for both upsizers and downsizers. Investments here are never going to struggle,” he said.
Prestigious suburbs with the biggest median valuation differences state-by-state
Looking state by state, water views and prestige blocks were also common threads between suburbs with the biggest fluctuations in median estimated house valuation.
After Rose Bay, the harbourside suburb McMahons Point showed the biggest difference in NSW at $8.5 million.
Houses in pockets with stunning harbour views had a median estimated valuation of $11.4 million while dwellings in areas with less impressive views were valued at $2.8 million.
The overall median estimated house valuation in McMahons Point was $3.2 million.
Director at McMahons Point Real Estate Craig Litchfield said the biggest compromise for smaller-budget buyers in what he called the “peninsula suburb” is position.
He said beautiful water views can see a house on one side of the peninsula fetch a much bigger price than a similar abode on the opposite side.
“The west side of McMahons Point has less desirable views … [but] there’s not really a poor spot to live,” Mr Litchfield said.
North Sydney had the third biggest fluctuations in median estimated house valuation in NSW with a difference of $8.4 million.
Melbourne’s Toorak had the biggest fluctuation in Victoria with a difference of $7.7 million. The leafy pocket around Kooyong and Hopetoun roads boasted a median estimated house valuation of $9.6 million compared with a more modest $1.8 million in streets between Malvern Road and Beatty Avenue.
The overall median estimated house valuation in Toorak was $4.2 million.
Director at Marshall White Stonnington Marcus Chiminello said many buyers think their only option in Toorak is a mansion home starting at eight-figures.
“The surprising thing is, in some of the most prestigious boulevards of Toorak, there are opportunities to live and enjoy a similar lifestyle below the million-dollar mark. But that will come at a compromise to the size of the residence,” Mr Chiminello said.
He said the more affordable areas of Toorak are typically the ones that border with other suburbs, but there are no “dark spots”.
“I call it ‘postcode insurance policy’, where someone has the benefit of the lifestyle of some other areas such as Prahran or Armadale and surrounds, but their investment in their own property is protected by the postcode of 3142,” he said.
Estimated median house valuations in nearby Malvern and South Yarra had the second and third biggest fluctuations in Victoria at $6.1 million and $5.6 million respectively.
The premium Queensland suburb with the biggest difference in median estimated house valuation was Teneriffe with a gap of $3.6 million.
Unsurprisingly, houses in Brisbane River-adjacent streets were the most valuable at an estimated median of $4.3 million. Just a few streets back from the river towards the neighbouring suburb of Newstead, the median dropped to $700,000.
The overall median estimated house valuation in Teneriffe was $2 million.
Sales and marketing consultant at Ray White New Farm Karla Lynch said there is no such thing as a bad pocket in Teneriffe.
“We’ve just got everything at our doorstep. We’re in the heart of the city, you’ve got ferry terminals, you’ve got public transport, you’ve got cafes, restaurants, you cannot go wrong with buying anywhere around [Teneriffe],” Ms Lynch said.
“You do get more value if you get out of the city… but then you’re not in the epicentre. I believe that’s what Teneriffe is, the epicentre and the hub of our Brisbane city and our lifestyle; it provides a completely different lifestyle to every other area.”
Elsewhere the suburbs with the biggest gaps in median estimated house valuation were West Lakes, SA with a difference of $1.4 million; Red Hill, ACT with a difference of $3.1 million; Mosman Park, WA with a difference of $4.1 million; Sandy Bay, TAS with a difference of $717,000 and Larrakeyah, NT with a difference of $914,000.
What to know before buying in a cheaper pocket
Whether it’s for the amenity factor or prestige, if home buyers have their hearts set on a premium suburb it’s worth doing extensive research before making a commitment, said Mr Kusher.
“It’s important to remember, and it is highlighted in this data, that the median [estimated house valuation] should only be used as a guide and buyers shouldn’t necessarily be deterred because the suburb median is out of their price range,” he said.
“In any given suburb there is an equal number of properties more affordable than the [overall] median than there are above the median.”
Mr Kusher suggested always keeping an eye on market conditions, which can cause property values to fluctuate.
“In times of tougher economic conditions, owners of the most expensive properties may have more difficulty finding buyers than those looking to sell cheaper properties,” he explained.
Ms Bakos cautioned that buyers should be practical and realistic about the state of a property and not be blindsided by its postcode.
“An uncompromised property in a bridesmaid suburb can be a better performer long term than a compromised property in an AA-grade suburb.”
Originally published as The prestigious Australian suburbs with surprisingly affordable pockets