First home buyers: It can be done N G discusses how the first home buyer can afford to join the property ladder if they educate themselves to all the associated costs.

It seems that it is becoming increasingly difficult to become a first time buyer in the state of New South Wales and in particular, the highly sought after Sydney Metropolitan area.

Since 2012, we have been experiencing a high-rate property boom that has seen prices more than double, leaving first home buyers out in the cold (or stuck at home with mum and dad).  Despite stamp duty exemptions and government grants for the first home buyer, recent statistics from the Office of State Revenue show that there are more foreign investors purchasing Real Estate than those trying to access the property ladder.

Buyers are able to access $10,000 as a first home grant - for newly built properties, valued up to $750,000 - and stamp duty reductions for properties up to $600,000. However, these benefits and grants are unfortunately not that beneficial in the booming Sydney market place.

In the South Eastern Suburbs of Sydney, where N G Farah specialises, the Government caps of $600,000 and $750,000 are difficult to adhere to as it is rare to find a property that costs less than this. Recently, Tara O’Dwyer sold a 24 square meter studio in Forsyth Street, Kingsford for $525,000; this is an illustrative example of how difficult it must be to find an affordable property in the Eastern Suburbs and take advantage of the Government incentives.

On the other hand, you would see more benefit of the home grants by purchasing property in greater Western Sydney and beyond. So maybe the answer is to flood west, but can millennials resist the temptations of the coastal lifestyle they have become accustomed to?

Maybe the answer is to educate the first home buyer before they even consider owning a property. Embrace the right attitude to save for a deposit from a younger age and the importance of building up a good credit rating with the bank which will enable them to negotiate the best interest rate when buying a property. As Tim Gurner controversially suggested that “the expectations of younger people are very, very high” and to be open of the “new reality where… a lot of people won’t own a house in their lifetime… when you’re spending $40 a day on smashed avocado and coffees and not working.” 

We don’t believe that that is necessarily the case, but being wary of where your income is going is definitely a necessity and being aware of what costs a first home buyer looking to purchase a property around $600,000 is faced with:

-          A 20% deposit = $120,000

-          Stamp duty on $600,000 is approximately $31,000 less a 50% discount = $15,500

-          Legal fees = approx. $1,500

-          Pest inspection, strata reports and building reports = approx. $1,000

-          Miscellaneous costs = approx. $1,000

+ Monthly mortgage repayments

First home buyers shouldn’t think they are restricted to the Sydney marketing and while prices are at an all-time high, areas in Brisbane and the Gold Coast are showing much better value for money.