Melbourne suburbs where houses cost less than $1.3 million

Potential Melbourne home buyers paid the average wage could afford to buy a house in a string of northern, western or outer south-eastern suburbs – provided their household is double income, no kids.

But a swath of well-located inner suburbs would be out of reach, given their high house prices, and if that household had children, their budget would be reduced further.

Single buyers looking for a house would face scant options, largely in the outer western suburbs, although single buyers of units would have more choice including in the inner ring.

A dual-income couple of average wage earners on a combined income of $213,900 could borrow enough to spend $1,307,250 on a home, modelling from comparison platform Canstar shows. This assumes they were able to save a 20 per cent deposit and have modest living expenses.

With two children, their budget reduces to $1,155,500.

A budget of $1.3 million is enough to buy the median house in Mentone, Vermont, Brunswick East or Williamstown North, Domain data shows.

But a block of suburbs from North Fitzroy past South Yarra to Beaumaris and as far as Blackburn and Templestowe would be out of reach.

A couple earning a combined 1.5 times the average wage would have a budget of $881,000, or just $729,250 if they had children.

And a single could afford to buy a home worth $653,625. In the house market, this would mean looking to western suburbs such as Werribee, Wyndham Vale or Melton, or north to Broadmeadows.

But if they chose a unit, they could consider the median unit in inner suburbs such as Glen Iris, East Melbourne, Cremorne, South Melbourne, Collingwood, Hawthorn East, Northcote, Thornbury or Brunswick.

Canstar data insights director Sally Tindall said it was tough for single income earners to buy their own home close to work.

“It can be severely limiting if you’re buying by yourself without a partner these days to get into the property market. Some people buy with family members or friends to get that double boost to their borrowing capacity,” she said.

She also encouraged double-income households to consider not just how much they could borrow now, but how they would repay it in future if they started a family or had any kind of career break.

“The median house price is just over a million dollars – that’s a huge amount, depending on your deposit, it’s still a huge amount of debt to be taking on even as a couple when you’re both earning decent wages,” she said.

“If you’re planning on having kids down the track, having a career change, having a career break of any sort, make sure you factor that into your number crunching.”

She encouraged potential buyers to look for levers they could pull to boost their borrowing capacity, such as closing down credit cards.

Director of property and buyers advocate at Entourage Finance Antoinette Sagaria often sees single buyers looking for apartments and villa units, and young professional couples aged 35 to 40-plus who are buying for the first time looking for townhouses and single-fronted houses.

“They either have been renting in a particular area, they really like it and they would like to stay in that area – and there’s always an education piece around, OK, depending on your budget, we may be able to stay in this area or we may need to look at surrounding suburbs,” she said.

Others are agnostic to the area. “We really get them to work backwards from, what would you ideally like to buy and let’s find properties that have sold in the last six months that fit that criteria, and that’s going to be a realistic search.”

She has noticed in the last few years buyers are coming to her with a better understanding than in the past of what they could afford, after researching online.

Armando Cruz is in the process of buying his first home in Clyde North, where he has land and is planning to build a new home.

The 24-year-old fourth year plumbing apprentice has had a goal to buy a house for about two-and-a-half years, and has been saving hard, including working as a cleaner on weekends.

He and his wife are buying the house with his mother and stepfather.

“You can’t buy a house just by yourself, you have to buy a house with your husband or wife to buy it, pretty much. You can’t do it by yourself,” he said.

His mortgage broker, Nitesh Jha, owner of 369 Home Broker, said the biggest challenge for first home buyers was trying to save while renting.

“They don’t want to spend more than what they’re paying in rent – let’s say I have rent of $600, I can probably go to $750,” he said.

“That means they will probably have to look into suburbs further away.”

He said most of his clients end up compromising on location.

“More often than not they’re 20 minutes out from the suburbs they’re renting in to achieve a similar repayment.”