Can you get a cheap home anywhere?

With our cheapest capital cities, Adelaide and Perth, now recording the strongest growth in prices over the past 12 months, is there anywhere you can still find a cheap home? Looking at homes priced under $500,000, the answer is that it is becoming far less likely, particularly for houses. But there are still places you can look.

In 2002, almost all houses and apartments sold in Australia were priced under $500,000. Fast forward to 2015 and just half were sold at this price point. Over the past 12 months, the proportion hit an all time low with just less than a quarter of houses now sold for under $500,000. The situation is slightly better for units with 39 per cent sold for under $500,000.

Not surprisingly, finding a cheap home in our capital cities is even more difficult. Over the past 12 months, less than 10 per cent of all properties (including houses and units) sold for less than $500,000 in Sydney. Canberra’s rapid building program has meant that the proportion of apartments sold under $500,000 drastically exceeds the number of houses sold under this price point.

Affordability is better in regional Australia, however, finding a low priced home in regional NSW is getting particularly difficult. Well under a third of all properties are now priced under $500,000.

While it is getting a lot harder to find cheaper homes, there are places to look and things to buy. The most obvious is to buy an apartment. While just 24 per cent of houses sold were priced under $500,000, that proportion increases to 39 per cent for apartments. Although Darwin and Perth don’t have a lot of apartments, they are generally low priced with more than two thirds priced under $500,000. Similarly regional areas of South Australia and Western Australia have very few apartments, but those that are there are very low priced.

At a suburb level, there are clear trends. Places where we have seen extremely high levels of apartment development have the most availability of low priced apartments. Gold Coast and Melbourne are expensive places to buy houses but there are a lot of low priced apartments in Melbourne CBD, Surfers Paradise and Southport. For houses, a strong development pipeline has kept outer Perth cheap with Baldivis and Armadale having the most houses being sold under $500,000 over the past 12 months. In regional Australia, Broken Hill tops the list.