The sandstone terrace is just 3.5 metres wide and the study is a bit poky for a guest bed. But in Sydney, this is how millionaires live.
The Musson family paid a shade over $1 million for the tiny two-bedder in Surry Hills in November, opting for closeness to the city over space for days and a garden where they can kick a ball.
Residents in Perth don’t have to make that choice, agents say. Nor do they have to in Adelaide, where $1 million is enough for a large home within three kilometres of the city with a pool and back yard big enough to fit a small football field.
“Incomes aren’t all that different between capital cities, but there’s just so much more bang for your buck in other cities outside of Sydney,” Fairfax-owned Domain Group economist Andrew Wilson said.
An investigation into the buying power of $1 million within three kilometres of each capital city CBD reveals the gap between homes and corresponding values across capital cities has reached an unprecedented high.
For $1 million and within three kilometres of the centre of Hobart, you can buy a five-bedroom home in West Hobart with stylish interiors, a designer kitchen, Derwent views and a rambling cottage garden. “A million dollars really puts you within Hobart’s prestige bracket,” Jo Ginn of Charlotte Peterswald For Property said.
In Perth, a buyer with $1 million can have an immaculate Californian bungalow in Highgate with four bedrooms, high ceilings, polished floorboards and a spacious outdoor entertaining area – all in under 20 minutes walk of the CBD.
Buyers in Melbourne looking for a home, and not an apartment, should expect to bring a hard hat.
A rundown balcony terrace at 324 Gore Street in the inner suburb of Fitzroy has huge cracks rippling its walls, and an asking price of $1 million.
“There’s never been more disparity between prices around the country. . . and capital growth rates close to the city means disparity between places like Sydney and Melbourne and the other capital cities is only going to increase,” Dr Wilson said.
Brisbane-based real estate agent Russell Gregory has about 10 inquiries a week from Sydneysiders considering a move north to find a larger, more affordable home.
“Generally, they tell me they want a family home near the city, and that’s what they can’t find in Sydney,” the Ray White Graceville agent said.
“And we’re generally able to surprise them with what they can get and how good it is for the price.”
Rampant house price growth in Sydney has led some experts to speculate the suburbs around the inner city could become like a gated community, where buyers are locked out of the market, unless they are already home owners.
“Sydney prices are that much higher than any other city, but owners aren’t contributing more of their salary to their mortgage or are more leveraged than any other city,” Dr Wilson said.
“If they already owned a home in Sydney, the equity they’ve built up with the past two years of capital growth has given them a huge advantage which they can tip into the new home.”
First-home buyers and newcomers moving to Sydney and, to a lesser extent Melbourne, face an incredibly high barrier to entry, which will only get higher.
Newcomers coming from interstate can always stump up the higher cost just to get into the more expensive market, but there is a high likelihood it will be a step down in living standards from what they are used to, Dr Wilson said.
Within three kilometres of Brisbane’s CBD, $1 million will buy you a three- to four-bedroom home on a lot of up to 400 square metres, Mr Gregory said.
“It’s not going to be wonderful, but you’ll get a very comfortable home.”
Mr Gregory has children living in Sydney and Melbourne who are looking to buy their own homes, without much luck. “They’re both trying to spend about $600,000 to $800,000 and are being very disappointed,” he said.
“But it’s where they want to live.”