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How millennials can buy a quality older home in Sydney or Melbourne for less than $600,000

Home hunters in Sydney and Melbourne can still find quality bargains near the city for less than $600,000.

Record-low interest rates have fuelled a property price boom pushing median house prices in Sydney above $1.1million for the first time ever.

The surge in property prices is so dramatic the Reserve Bank of Australia is worried about low-income people, including the young, missing out following the end of JobKeeper wage subsidies.

‘If housing prices continue to rise as the end of stimulus payments slows household income growth, this will present renewed challenges for housing affordability for lower-income households,’ it said on Friday.

Australians can buy a house in a smaller capital city or a regional centre if they are prepared to be an investor landlord.

But for average-income earners wishing to live in the home they are paying off, apartments near the city still are available for less than $600,000 – well below Sydney’s median unit price of $755,360, going by CoreLogic data.

Millennials can buy a home in Sydney and Melbourne near the city for less than $600,000 if they are prepared to look for a quality bargain near the city. Pictured is a two-bedroom unit with one bathroom and a car space is available for $570,000 at Mascot in south Sydney

Key tips for buying an apartment

Choose a unit with at least two bedrooms with outer suburban one-bedroom and studio apartments unlikely to grow as much in value

Choose an apartment in a smaller unit block with just three storeys

High-rise apartments with more than ten storeys are considered riskier

Older-style blocks are better built with the NSW government changing planning laws in 1998 to allow private certifiers instead of council inspectors

Cracking problems in Mascot and Sydney Olympic Park connected with bad certification 

Be mindful that apartment blocks with lifts, gyms and a pool will typically have higher strata fees of more than $1,000 every three months 

These bargains are also for better-built older-style brick units, not apartments in recently-built high-rise towers with quality problems.

Select Residential Property head of research Jeremy Sheppard advised prospective unit buyers to choose something with at least two bedrooms in a block that preferably had just three storeys. 

‘If investors were going to purchase a unit, they should probably target low rise, definitely not high rise,’ he told Daily Mail Australia.

‘A three-storey walk-up would be low-rise. Anything more than about 10 storeys, I’d call say high rise.’

A two-bedroom unit with one bathroom and a car space is available for $570,000 at Mascot.

The suburb is an eight-minute train ride to the city and is also near the airport.

The red brick unit is also in a low-rise complex with just three storeys and is north facing, meaning the afternoon sun will flood in during winter. 

Older-style unit blocks typically also don’t have elevators or gyms, saving owners from having to pay expensive strata fees of more than $1,000 every three months.

In this Mascot unit block, owners pay strata levies of $704 a quarter. 

With repayments estimated at $1,900 a month, with fixed mortgage rates now at less than 2 per cent, someone earning an average, full-time salary of $89,000 would be able to afford it.

Select Residential Property head of research Jeremy Sheppard advised prospective unit buyers to choose something with at least two bedrooms in a block that preferably had just three storeys. Pictured is an older style block at Mascot near Sydney airport

Select Residential Property head of research Jeremy Sheppard advised prospective unit buyers to choose something with at least two bedrooms in a block that preferably had just three storeys. Pictured is an older style block at Mascot near Sydney airport

Buyers willing to pay something a few train stops from a trendier suburb can also find a bargain. 

Campsie is much cheaper than nearby Dulwich Hill and Marrickville, with a two-bedroom unit in an older block advertised for $499,000 to $599,000.

The older unit can also be renovated to boost its capital growth. 

The suburb with restaurants is a 23-minute train ride to the city.

Campsie is much cheaper than nearby Dulwich Hill and Marrickville, with a two-bedroom unit in an older block advertised for $499,000 to $599,000. The older unit can also be renovated to boost its capital growth

Campsie is much cheaper than nearby Dulwich Hill and Marrickville, with a two-bedroom unit in an older block advertised for $499,000 to $599,000. The older unit can also be renovated to boost its capital growth

While one bedroom and studio apartments are frowned upon by real estate experts, ultra small units in old art deco blocks are the only way the young can buy right near the city. Pictured is an early 20th century unit block at Darlinghurst in Sydney's eastern suburbs

While one bedroom and studio apartments are frowned upon by real estate experts, ultra small units in old art deco blocks are the only way the young can buy right near the city. Pictured is an early 20th century unit block at Darlinghurst in Sydney’s eastern suburbs

While one bedroom and studio apartments are frowned upon by real estate experts, ultra small units in old art deco blocks are the only way the young can buy right near the city. 

Darlinghurst, a nightclub district in Sydney’s eastern suburbs, has a tiny 32 square metre studio on the market for $445,000 and an even smaller 26 square metre pad selling for $400,000 to $440,000.

In Melbourne, a two-bedroom apartment in an older style block at Toorak is advertised for between $550,000 to $590,000 – a level almost in line with the Victorian capital’s $593,121 median price.

The ground floor unit is also near a tram stop in Melbourne’s most upmarket suburb. 

Darlinghurst, a nightclub district in Sydney's eastern suburbs, has a tiny 32 square metre studio on the market for $445,000

Darlinghurst, a nightclub district in Sydney’s eastern suburbs, has a tiny 32 square metre studio on the market for $445,000

An even smaller 26 square metre pad selling for $400,000 to $440,000 in Darlinghurst

An even smaller 26 square metre pad selling for $400,000 to $440,000 in Darlinghurst

At nearby Kew, a two-bedroom apartment on the market for between $530,000 to $560,000.

Prospective property buyers are generally advised to avoid one-bedroom units in the outer suburbs, especially ones in a high-rise tower, as cramped apartments only ever appeal to investors – not potential owner-occupiers with children.

‘There’s an issue with one-bedroom units in that they aren’t entirely popular and their resale value may suffer,’ Mr Sheppard said.

Apartments in newer, high rise complexes are a risky investment because developers can easily build new ones, increasing the supply and suppressing price increases. 

In Melbourne, a two-bedroom apartment in an older style block at Toorak is advertised for between $550,000 to $590,000 - a level almost in line with the Victorian capital's $593,121 median price

In Melbourne, a two-bedroom apartment in an older style block at Toorak is advertised for between $550,000 to $590,000 – a level almost in line with the Victorian capital’s $593,121 median price

At nearby Kew, a two-bedroom apartment on the market for between $530,000 to $560,000

At nearby Kew, a two-bedroom apartment on the market for between $530,000 to $560,000

‘It could be a growing market in the future but the problem with units is it’s just too easy for developers to knock up a block next door, across the road, round the corner and over supply is going to be your enemy,’ Mr Sheppard said. 

Newer high rise blocks have quality issues.

Mascot is also home to badly built newer apartments, including Mascot Towers that was blocked off to residents in December after cracks were discovered. 

On Christmas Eve 2018, hundreds of residents were evacuated from the 36-storey Opal Tower at Sydney Olympic Park, less than a year after the 392-apartment complex was finished.

The problems have been linked to new laws from 1998 that allowed private certifiers instead of council inspectors to supervise construction projects.

Mascot is also home to badly built newer apartments, including Mascot Towers that was blocked off to residents in December after cracks were discovered

Mascot is also home to badly built newer apartments, including Mascot Towers that was blocked off to residents in December after cracks were discovered

In late 1997, Bob Carr’s first-term New South Wales Labor government amended the Environmental Planning and Assessment Amendment Act so private certifiers instead of local council inspectors ensured building work complied with design requirements.

A new private certification scheme came into effect in July 1998, copying a system that had already existed in South Australia, Tasmania and the Northern Territory.

The makes units in an older-style block a safer buy. 

Read more at DailyMail.co.uk