Revealed: Australia’s most popular suburbs for first-home buyers

The Dandenong area of Melbourne has been named Australia’s first-home buyer capital and the wider city cemented as the nation’s top hotspot for market entrants.

It comes as part of new research showing more first-home buyers are making a move today than they were before the pandemic — despite a typical market entrant household being able to afford the mortgage on fewer than one five homes sold nationwide in the past year.

With the report also identifying the areas that are on top of first-home buyer shopping lists around the nation, it’s also a shortcut for where they could soon be driving a market boom off the back of boosted government support schemes and interest rate cuts.

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The First-Home Buyer Report from PropTrack and the CBA has revealed it now takes almost six years for an average household to save a 20 per cent typical home deposit, and that if it weren’t for Melbourne first-home buyers around the country would be able to afford fewer than one in seven homes listed for sale.

The Victorian capital accounts for seven of the top 10 most searched first-home buyer areas around the country, with the Brunswick-Coburg area, as well as Preston and Reservoir filling out the top three.

The only other parts of the country to make the list were Canberra’s Gungahlin and Molonglo regions, ranked fifth and seventh respectively, and the north west of Hobart in Tasmania — ranked 10th.

Latest Australian Bureau of Statistics data backs the report, with Victoria recording 38,472 new loans to first-home buyers in the past financial year — more than a third of the 116,280 mortgages signed to market entrants nationwide.

Loans to first-home buyers across the country are up more than 29,000 compared to the same time in 2015.

PropTrack chief economist Angus Moore said the increase in first-home buyers nationwide, and even in Melbourne, was “surprising” given that housing was now “a lot less affordable than it was five years ago when interest rates were much smaller”.

While Mr Moore said three interest rate cuts since February had boosted wannabe homeowners’ ability to pay mortgages and what they could borrow, the reality was that there was no chance of regaining affordability levels seen as recently as during the pandemic.

Where Australians Look For A First Home

“We won’t go back to 2021 affordability levels, when interest rates were at record lows,” he said.

Despite this, he estimated would-be buyers had about a year, though less in some areas, before home price rises eroded the interest rate cuts’ benefits.

With expansions to the federal government’s Home Guarantee scheme that will give more young Australians a chance at buying a home with a 5 per cent deposit, whild dodging the need to pay expensive lenders’ insurance, it could prove a powerful combination.

While it’s likely more first-home buyers will get federal government assistance after price caps and income thresholds on the nation’s Home Guarantee scheme are updated from October 1, Mr Moore said it was hard to know how much of an impact this would have — though he expected there would be some increase in buyer numbers.

He noted that the share of homes open to first-home buyers under the revised scheme’s 5 per cent deposit margin would come close to doubling in some capitals as caps lift from $900,000 to $1.5m in Sydney, from $700,000 to $1m in Brisbane, and frmo $600,000 to $900,000 in Adelaide.

In Melbourne it will be a more modest increase in availabilities, as the cap goes from $800,000 to $950,000.

Last month the CBA forecast one more interest rate cut this year to give would-be market entrants more borrowing power, and reduce the cost of paying a mortgage.

But also estimated that nationwide, home values would rise 6 per cent in total across 2025, and a futher 4 per cent in 2026.

They have tipped Brisbane, Perth and Adelaide to perform the most strongly with increases from 8 per cent to 6 per cent across this year — and more modest increases in Sydney and Melbourne.

Mr Moore noted that Melbourne was “dragging up” the nation’s overall affordability.

What first-home buyers should expect in Sydney, Queensland and South Australia.

The typical income range of a renting couple in their late 20s or early 30s, about $129,000 nationwide, was enough to cover just 17 per cent of homes sold around the country in the past year. This included both houses and units.

In Victoria the figure was 24 per cent, though it did have a higher $140,000 typical income for such a buyer.

But with lower income brackets and higher prices in other parts of the country, affordability was far worse.

In South Australia just 14 per cent of homes would be within reach, while in NSW only 13 per cent of homes could have been covered by such a buyer.

In Queensland rapid price surges that had outpaced wage growth meant only 12 per cent of homes sold in the past year could have been bought by a first-home buyer with a 20 per cent deposit or less.

The economist said one of the big reasons why Melbourne home values hadn’t surged in line with the rest of the nation, and offered better affordability today, was its higher proportion of new homes being built today and over the past few decades.

“A lot of our new housing development is in Melbourne’s outer suburbs,” he said.

“And that does attract population growth to where you can find more homes, and it’s also part of why those homes are more affordable.”

In the Dandenong area, which topped the list nationwide, first-home buyer searches in the region are close to double the national average, thanks to its affordable $730,000 median house price and $404,000 typical unit price.

Dandenong-based Barry Plant agent Chee-ky Dunlop said the region had been a “first-home buyer area for a long time”.

Mr Dunlop said many were families who didn’t have a lot, but were prioritising the home dream — and in some instances teaming up with other members of their wider family.

“They are just finding a way to make it happen,” he said.

“And many of them are looking for a fixer upper that they can update over time.”

Real Estate Insitute of Australia president Leanne Pilkington said that it wasn’t just Victoria with more first-home buyers active, and that many were still finding a way to buy against the odds of a housing affordability crunch.

But with investor numbers also rising, likely increasing competition in the “limited” areas that market entrants could afford, Ms Pilkington said price rises should be expected for affordable homes.

“So the bottom range of properties are more likely to increase over the next year or two,” she said.

“But even then, I think they will keep finding a way.”

Mr Moore added that one of the most immediate reliefs for housing affordability broadly would be for state governments to address stamp duty.

While most do offer a concession scheme or even total waiver for the tax below certain thressholds, it is not unified — and the cost can deter others higher up the chain from selling, creating limited supply.

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