Where you can live on an island for less than $500,000

Queensland and South Australia have seen some of the country’s strongest price-growth in the past two years, but those looking for a bargain might just find one by hopping on a boat.

An analysis of Proptrack data has found Brisbane’s two cheapest suburbs are islands only accessible by boat – Russell Island and Macleay Island. The suburbs had median house prices of $417,000 and $480,000 respectively in July – less than half Brisbane’s overall house median of $1,067,000.

In South Australia, the Kangaroo Island suburb of Kingscote had a median house price of $465,000 – bang on the state’s regional median – but significantly less than Adelaide’s $916,000 median house price.

Island Life Property Russell Island agent Rhys Franz said the island had been a “hidden secret” until 2020 and – despite still being very affordable – had recorded strong price growth since then.

“When the pandemic hit and everyone had their big great awakening, a lot of people in the city realised that they wanted some sort of a lifestyle,” Mr Franz said. “The three bedroom, two bathroom houses that were high $400,000s last year, are low to mid-fives this year.”

PropTrack data shows the median house price on Russell Island has more than doubled in the past five years – gaining $212,500. It’s a sizeable increase when compared with the five-year growth between 2015 and 2020 – just 10% or $17,500.

Mr Franz said when he started working on the island in 2020, people mainly moved there because of its affordable homes, but that has changed significantly.

“Now it’s a lifestyle,” he said. “We don’t have traffic, pollution, light pollution or noise.

“It’s very much like what you’d think a community was before life got really busy and everyone was working in the household. It’s a bit slower here – it feels very special.”

The ferry factor

Though the accessibility to “the mainland” was part of the reason houses could be picked up for under half a million dollars, Mr Franz said it was not a deterrent for buyers.

“It contributes for sure but we have a ferry system with SeaLink seven days a week from 4am to midnight and it’s 50 cents,” he said. “It’s just a 30-minute extra commute really, but you’re on the water, you’re not in traffic. It’s nice – until you get to the mainland!”

At the opposite end of the country, the accessibility-factor definitely plays a part in keeping house prices low, according to Elders Kangaroo Island agent Julia Smith.

“We don’t have a bridge coming over to us. We have a ferry service which is ridiculously expensive,” Ms Smith said. “It’s the most expensive stretch of water to travel across in Australia.”

SeaLink’s website shows a return adult fare to Kangaroo Island is $122, and an extra $236 return to bring a standard car.

“The other issue we’ve got on Kangaroo Island is there is a long wait to build new housing and it costs between 30% and 40% more than the mainland to build a house because of the freight component,” Ms Smith said.

Despite these draw-backs, the largest suburb of Kangaroo Island, Kingscote, has recorded house-price growth of 13% in the past year and 75% in the past five – an increase of $199,350 in the median house price since 2020.

“About 50% of what I sell on the island is to off-islanders – either Adelaide or South Australia based, but we have also had a massive influx from the eastern seaboard,” Ms Smith said.

“A lot of them have been to visit, fell in love with the island, thought they’ll buy a place so they can use it as a base, but Airbnb it in between.”

Another of Kangaroo Island’s suburbs – American River – did not have more than 30 sales in the past year and therefore was not included in the data. However, based on its 13 sales, it had a year-on-year median of $442,000.

Ms Smith said despite the recent interest from interstate investors, retirees looking for lifestyle and affordability were still largely Kangaroo Island’s main buyer.

“My last three sales have been retirees from off-island coming to-island for affordability reasons. They can’t afford to retire on the mainland but they love Kangaroo Island and they can afford to retire there.”

In contrast to these boat-only ’burbs, other island suburbs accessible by bridge saw significantly higher house prices – for example Hindmarsh Island in Adelaide (median $928,000) and suburbs of Victoria’s Phillip Island including Ventnor ($832,800) and Cowes ($730,000).

One boat ’burb bucking the trend was Sydney’s Scotland Island with its $1.4 million median house price. Though cheaper than Sydney’s overall house median of $1,564,000 – its large and often luxurious waterfront homes commanded much more than a typical bridge-less isle.

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