Sydney one-bed apartments price out first home buyers

According to new data, the median price for a one-bedroom apartment in Sydney has skyrocketed by $200,000 in just four years, pricing out many first home buyers in search of their first home.

It’s not surprising that there is a record low number of first home buyers in the Sydney property market today. The median price for a one-bedroom apartment in Sydney will now cost you the extortionate figure of $630,000. As well as the price of apartments having rapidly risen over the course of just four years, many first home buyers are finding that they are ineligible for the stamp duty concessions available on new homes, due to this being capped at $650,000.

Government incentives not helping first home buyers

$630,000 is becoming increasingly unaffordable for a large proportion of buyers, especially first home buyers. First home buyers can receive a $10,000 grant from the government if they buy a new property that sits under $750,000, but $10,000 in the grand scheme of things does little to help the growing unaffordability factor. Buyers who spend less than $550,000 on a new home can avoid stamp duty altogether, but there are limited properties in Sydney for this price today.

According to a Domain Group analysis, it now takes approximately four years for someone on an average salary to save a 20 per cent deposit for a one-bedroom Sydney apartment. This is based on the ability to save $540 a week, without taking into account an increase in property prices during this time. You could therefore potentially buy a property in 2020. However, the likelihood is that you will also have to pay stamp duty, increasing this timescale to five years rather than four.

If you buy off the plan, then you will require a 10 per cent deposit initially, but this will still take you approximately two years to save up if you have no savings already behind you.

Diverse supply of household types could help affordability

One way of introducing more affordable housing into Sydney is to create a diverse supply of household types and townhouses is one housing type that is more affordable in comparison to detached houses. Apartments are also more affordable compared to houses, and the further west you go, the cheaper the property price.

Single professionals are not the only demographic listed as first home buyers. There are many families with children as well as more mature adults that have yet to purchase their first home, and a one-bedroom apartment might not be suitable for everyone. If a one-bedroom apartment is unaffordable, then the likelihood for a couple with children being able to buy something larger is near enough impossible.

However, there is great appeal for one-bedroom apartments due to being more affordable than two-bedroom apartments and many suburbs have a large proportion of single professionals or couples living there.

How can first home buyers afford Sydney property prices?

So how can first home buyers get a foothold on the Sydney property ladder? One alternative that many first home buyers are considering even more now is to invest in property interstate first to receive the high depreciation benefits and other tax savings as an investor and potentially live in the property later. First home buyers could also save up enough money through this investment property’s equity to fund the purchase of your owner occupier home.

Buyers are starting to change their attitudes from buying a property to live in to buying any good property in a prime location as an investment first and then buy a property to live in later.

By purchasing interstate, you can tap into the lower property prices, and still benefit from a stable economy like Melbourne’s or growing property prices that Brisbane is expecting over the next few years. The current median unit price in Melbourne is $495,000, whilst Brisbane’s median unit price sits at $385,000 compared to Sydney’s $690,000 according to the November CoreLogic Home Value Index Report.

Increasing the number of more affordable properties will also help some buyers struggling to enter the property market altogether. There is also the option of buying further north or out west to tap into the more affordable property opportunities here.

Clever ways to buy property as a first home buyer

Besides investing interstate or looking further afield, other clever ways to buy a property as a first home buyer in Sydney include:
  • Buying off the plan – Only 10% deposit required initially and you can access projects before anyone else at a more affordable price before they are built.
  • 5% deposits – Some developers of off the plan properties are also offering 5% deposits or similar incentives.
  • Buy with your partner – If you are struggling to save on your own, then maybe you should consider buying with your partner or family member. Just remember to seek legal assistance and draw up contracts first and know the end goal to avoid any disputes.
  • Ask parents for help – You could always ask your parents to help with a deposit, or for them to be guarantors, securing the deposit against their house if there is enough equity to do so.
If you are a first home buyer struggling to enter the Sydney property market, then it’s time to think smart and perhaps change tactics. You may be able to purchase a property, but this might not be as a first home buyer.

To learn what options are available to you, or to find out how you can purchase a property sooner it’s best to speak to one of our Property Consultants at iBuyNew. Our Property Consultants have years of experience working in the property industry so can advise you on the best approach that you should take to get you to your end goal.

Simply call us on 1300 123 463 to find out more.
Published on 23rd of November 2016 by Marty Stanowich
Marty Stanowich
Marty Stanowich


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