Aaron Langmaid From: Herald Sun November 21, 2009 12:00AM
BUYING a house has never been harder for first home buyers in Melbourne, with shrinking affordability forcing more people farther out of the city than ever before.
Startling figures reveal the property dream has all but vanished for disheartened first time buyers, with houses for less than $400,000 few and far between.
The Real Estate Institute of Victoria has revealed more than half of all the properties sold in February cost less than $400,000 — but by October the figure had dropped to just one in three houses. Meanwhile the percentage of million-dollar homes more than doubled in the same period.
REIV chief executive Enzo Raimondo said six months of near-record demand had transformed the marketplace.
“Essentially there have been less sales at the more affordable end because properties have become more expensive,” Mr Raimondo said.
A jump in the median house price, from $405,000 in March to $480,000 in September, was the main driver, he said.
According to the data, 56 per cent of houses sold in February were less than $400,000, compared with just 35 per cent last month.
The number of sales in the $500,000 to $1 million category increased from 24 per cent in February to 38 per cent in October.
Western suburbs real estate director Craig Stephens said first home owner grants, low interest rates and many young, eager and well-paid professionals had created the perfect storm.
“It is almost impossible to find a property under $400,000 in the inner west,” Mr Stephens said.
“It’s more likely to be a flat or unit, whereas two years ago you could have brought a two-bedroom house for the same price.”
He said some opportunities still existed in areas such as West Footscray, Maidstone and Kingsville — but even then they were limited.
Hampton real estate director Adam Gillon said he only had two properties for less than $400,000.
“A big part of our market is the first home owner, but the reality is it is harder than ever,” he said.
“There are very limited opportunities and even the basic two-bedroom units are starting to fetch above the $400,000 mark.”
Opportunities in Melbourne’s north and northeast are also slim.
Agent Amrish Majeethia said Coburg was out of the question, but farther north there was still a chance for buyers. “You can still get a house under that price in areas like Fawkner,” he said. First home buyers in the east would have to drive to Croydon before they could even start looking, agent Mark Fletcher said.
