Buying a Home in Sydney
For Sydneysiders looking to purchase their own home, getting on the property ladder is harder than it’s ever been. With a perpetual shortage of houses available for purchase, significant demand, and a cost of living crisis, Sydney is pricing out its own residents. Whilst the effects of the ongoing changes on Sydney house prices and Sydney unit prices has felt quite sudden, affordability has decreased significantly in recent years.
Whether you’re ready to take the final plunge or are just setting out on your home-buying journey, understanding the median home and unit value in Sydney and how long it takes to afford a deposit can help.
Sydney Property Market In 2023
Sydney house prices and Sydney unit prices were in a trough at the start of the year in January, but recent demand is driving prices back up, with records likely to be set if they continue rising at current rates. We will be exploring the current median price of houses and units in Sydney in 2023, how long it takes to save for a deposit and affordability.
The latest information on Sydney house prices shows a median value of $1,324,396. Despite a -5.7% change in the last 12 months, Sydney house prices are currently booming, with a 2.0% increase month-on-month and a 5.5% increase quarter-on-quarter. House prices in Sydney are still below their peak in January 2022, but continued demand is likely to push them to even higher heights in the near future.
Compared to house prices, Sydney unit prices have been less volatile and are seeing lower – albeit still strong – gains in value. The median unit price in Sydney is currently $808,407, a 1.2% month-on-month increase and a 3.5% quarter-on-quarter increase. This is still lower 3.4% lower than the same time last year, but with the cost of buying a home rising at an even higher rate, units are the most affordable option for buyers looking to secure a property.
Despite house prices far outperforming salary increases, when lenders are calculating borrowing power, there are a few factors that need to be considered. Assuming less than 30% of gross income is spent on mortgage repayments, a serviceability buffer of 3 percentage points to combat interest rate increases and a debt-to-income ratio of less than six – as The Australian Prudential Regulation Authority considers anything higher than that to be dangerous – those on a single income currently cannot afford to buy a median-priced home or unit in Sydney.
On a gross salary of $100,000, buyers have a borrowing capacity of just $306,300. Whilst this might sound like a lot, even with a 20% deposit, individuals can only afford a property value of $382,875, which is less than half of the median-priced unit in Sydney and over three times less than the median-priced house. Borrowing capacity on a gross salary of $50,000 or $75,000 makes purchasing a home unrealistic, as it only allows for a home loan of $153,000 and $229,700, respectively.
Using the median prices of homes and units in Sydney, respectively, and assuming a 20% deposit, buyers would need to have $264,879.20 for a house and $161,681.40 for a unit.
As house prices have grown three times faster than wages over the last four decades, saving 20% for a deposit has become more difficult than ever. Based on the metrics employed in the ANZ Housing Affordability report, where a household is saving 15% of gross annual household income to save for a deposit, it would take the average earner in 2023 of $94,000 almost 11.5 years to save 20% for a unit, and over 18.5 years for a home.
How To Buy A Home In 2023
Whilst there are a number of barriers to buying a home in Sydney in 2023, there are ways to speed the process up. From the NSW first home buyer assistance scheme that exempts first-time buyers from paying stamp duty on homes valued up to $800,000 to The First Home Guarantee that allows first-time home buyers to purchase a property with a deposit as little as 5%, buying a home might be challenging, but not impossible.
Enlisting the help of a buyer’s agent can help give you the best chance of buying a home in Sydney. With a comprehensive knowledge of the real estate market in Sydney, a thorough understanding of the suburbs to help you get the best value for money, and the experience to offer guidance through the entire process, buyer’s agents can take care of every step of the journey.
If you are ready to get started, get in touch with the knowledgeable team at Rose & Jones.
About Rose & Jones
Rose & Jones has been helping clients find and purchase properties in Sydney, Brisbane, and the Northern Rivers since 1998. A renowned property buyer’s agency across residential, commercial and industrial sectors, every one of our property experts meets our high standards, so you won’t have to compromise yours. With access to a wide network of off-market properties, our team can help you find the perfect property. Also offering property management services and investment advice, make Rose & Jones your go-to when it comes to real estate in New South Wales and Queensland.