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Despite a competitive market, pockets of affordability remain, with Melbourne leading in liveable, investor-friendly suburbs as unit-house price gaps narrow.
A new report by PRD showed that Australian capital cities still offer pockets of affordability, with Melbourne taking the country’s lead with the highest number of affordable suburbs for investors and first-time buyers.
According to the data, Melbourne recorded the highest number of affordable suburbs across all dwellings, totalling 151 suburbs across 20 kilometres from the CBD.
This was followed by Sydney with 140 suburbs, Brisbane with 132 suburbs, and Hobart with 37 suburbs across all dwellings.
PRD chief economist, Dr Diaswati Mardiasmo, said that an affordable suburb isn’t the cheapest, as it needs to include liveability factors like low crime, new supply, and access to essential infrastructure such as schools, hospitals, transport, and green spaces.
“We’ve defined an affordable suburb as one with a median house price or a median unit price significantly lower than the capital city, good liveability, investment return, and stock supply.”
“This report is also for investors, as we’ve made sure each suburb has a higher rental return than the capital city itself,” Mardiasmo said.
According to the Smart Moves Capital City Edition: 1st Half 2025 report, units remain the most affordable market nationwide.
While Sydney recorded the highest number of affordable suburbs for units, with 115 and a median price of $854,968, it only represented 36.9 per cent of the city’s market, with the city remaining the most expensive nationwide.
In Sydney, the report highlighted Punchbowl, Lakemba and Harris Park, with median unit prices ranging from $450,000 to $550,000.
For the first time, Melbourne eclipsed Brisbane and Hobart with the highest percentage of affordable suburbs for units at 42.9 per cent, representing 96 suburbs with a median unit price of $610,327.
Mardiasmo said while Melbourne hasn’t historically been an affordable city, it has emerged as a standout market.
“However, due to Melbourne still being in a recovery phase and the ease of finding ready-to-sell housing stock projects for 2025, the city presents itself as a key opportunity for buyers,” she said.
The report pointed to the Maribyrnong, Williams Landing and Epping suburbs in Melbourne, all presenting opportunities with prices under $500,000.
“Melbourne’s ongoing market recovery and significant planned unit developments make it an attractive option for investors,” she said.
Mardiasmo said that since the second half of 2024 of the Smart Moves report, the share of affordable suburbs has fallen across all capital cities and most property types, with Brisbane units seeing the sharpest drop from 60.3 to just 38.7 per cent.
“Choosing an affordable and liveable suburb in Brisbane continues to be the hardest, due to property price growth in most of Brisbane’s suburbs and a low level of new residential stock planned.”
In total, Brisbane recorded 77 affordable suburbs for units, representing 38.7 per cent of the market, with a median price of $698,479.
The report pointed to Bowen Hills, Springwood and Slacks Creek, which offered apartment options under $550,000.
Mardiasmo said the only capital city where units and houses had almost equal access to affordable suburbs was Hobart, with 41 per cent and 42.9 per cent, respectively.
Data showed that the Hobart market counted 21 affordable suburbs for houses and 16 for units, with the best suburbs for apartments being Mount Nelson, Glenorchy and New Town, sitting between $450,000 and $520,000.
Mardiasmo said the report’s findings showed that while the Australian property market remains competitive, there are still opportunities for both first home buyers and investors to enter the market.
“While units currently offer more affordability, the price gap between houses and units is narrowing.”
“As demand for housing continues to outstrip supply, particularly in desirable areas, both property types are expected to appreciate in value,” she concluded.
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