Sydney’s property market turned a corner in 2023, with prices rising consistently over the past 12 months and close to recovering to their pandemic peak.

Sydney’s median house price is the highest across the country, at $1.4 million, while the capital city’s median unit price reached $834,578 in January.

That’s the cost of living in an international city on the water which offers an unparalleled lifestyle.

The problem is, thanks to high inflation, rocketing interest rates and reduced borrowing capacity, the pool of buyers able to afford the median-priced property in many Sydney suburbs is getting smaller by the day.

First-home buyers in particular struggle to get onto the ladder as affordability issues push many property areas further out of reach.

But the good news is there are still plenty of suburbs across the city where the price tag is a little more affordable.

Domain’s latest House Price Report reveals that there are still 198 Sydney suburbs where the median house or unit price sits below $1 million.

Where you can buy in Sydney under $1 million

Source: Domain

Domain’s list, which is in order of distance from Sydney’s CBD shows where the more affordable suburbs are located.

In Darlinghurst and Points Point, for example, which are both just 1km away from the Sydney CBD, the median unit price is around $914,000 and $915,000 respectively.

Meanwhile, you could buy a unit in Sydney’s most affordable suburb, Kingswood, for around $370,043, but the suburb is located 52km away from the city centre.

Kingswood houses come in a bit higher with a $740,000 median.

Lakemba follows as Sydney’s second-most affordable suburb, located 13km south-west, with a median unit price of $392,000.

The data shows that the most affordable houses are located in Lethbridge Park, 40km west of the CBD, which has a median of $660,000.

The area’s typical house has three bedrooms and one or two bathrooms and sits on a good block of land ranging from 600 to 650 square metres.

For those still looking to live less than 2km from the city centre, the median unit price in Rushcutters Bay is $700,000, and in Ultimo it’s $850,000.

What’s behind the affordable property prices?

Generally, most (not all) of these affordable areas with lower median prices are in areas where demand is low and amenities and transport links are hard to come by.

Other areas may be in a great location but on a less desirable street, very small in size or lacking amenities that other properties in the same area are able to offer.

It’s an important consideration because, as I always say, it’s not just the property – it’s about location.

I believe that location will do about 80% of the heavy lifting of your property’s capital growth.

And not all locations are created equal.

Some suburbs will be more popular than others, some areas will have more scarcity than others and over time some land will increase in value more than others.

The suburbs mentioned in the lists above might look like a well-priced investment opportunity but many of them are on the low end of the pricing spectrum for a reason: location.

And the location is something you cannot change.

That’s why it’s important to buy your investment property in a suburb that is dominated by more homeowners, rather than a suburb where tenants predominate.

And you’ll find suburbs where more affluent owners live will outperform the cheaper outer suburbs where wage growth is likely to stagnate moving forward.

This is because the more established suburbs with better infrastructure, shopping, and amenities tend to be close to the CBD and the water and that’s where the wealthy want to and can afford to live, and they’re prepared to pay a premium to live there.

Overall, by focussing your research on what those often overlooked owner-occupiers are doing, you may just find an investment that outperforms the market and delivers strong value and growth over the long term.

Despite these areas being ‘cheap’, their low median house and unit prices alone aren’t enough alone to warrant a good investment opportunity.

‘Cheap’ property will always be ‘cheap’ so don’t get lured into thinking you’re getting a bargain.

Also, never expect investment-grade returns from secondary locations and properties.

About Robert Chandra
Robert Chandra is a Property Strategist at Metropole and has an intrinsic understanding of property markets backed by many years of real estate experience. This coupled with several degrees gives him a holistic perspective with which he can diagnose clients’ circumstances and goals and formulate strategies to bridge the gap.