The Changing Face Of The First Home Buyer

We’re expecting to see more first home buyers hit the eastern suburbs property market in 2020.

However, they may not all be quite what you’d expect or looking for the typical first home or unit.

One of the trends we’re predicting for this year is more first home buyers entering the Sydney property market. Government stimulus packages for first home owners, combined with falling property prices and interest rates, are making many would-be homeowners realise that it’s time to seize the day and get their foot on the property ladder.

A new breed of first home owners

While the common assumption is that first home buyers (FHB) are people in their early to mid-twenties looking for a low-budget starter home or unit, the reality is that this is not always the case.

In Sydney’s blue-chip eastern Suburbs, we are seeing a new wave of first home buyers who are defying these preconceptions. These buyers are a bit older, typically in their early to mid-forties, and may have been renting for a long time. Being well-established in their careers means they have greater financial stability and therefore purchasing power. Some have deliberately chosen to delay purchasing, either for lifestyle reasons or so that they could save longer and have a larger deposit to buy their dream home. With greater capacity to service a loan, they have bigger budgets, in some cases in the $2M or $3M price range.

What are first home buyers looking for?

Naturally, there are still many younger first home buyers who are seeking properties under the FHB scheme caps, like new built homes or smaller units on a budget up to around $700,000. However, the more affluent, older first home buyers are purchasing two-bedroom+ terrace homes in blue chip suburbs such as Paddington and Woollahra. In fact, we’ve sold houses worth more than $5 million to first home buyers.

What are first home buyers eligible for?

There’s a wide range of help for first home buyers available now, which is a big part of why this sector is rapidly on the rise. Although the new breed of first home buyers may not benefit from all of them because of price caps, current Government stimulus packages include:

First Home Loan Deposit Scheme

This new federal scheme, which commenced on the 1st of January 2020, is intended to help first home buyers over the deposit hurdle that can be a big challenge for many. It enables first home buyers to get into the market with a deposit of just five per cent of the home’s value, with the government guaranteeing up to 15% of the loan value. This way, first home buyers can avoid paying the expensive Lenders’ Mortgage Insurance (LMI) that is typically required with a deposit of less than 20% of a property’s value. However, there are limits on the numbers that will be approved and strict eligibility criteria.

First Home Owner Grant

The First Home Owner Grant gives eligible first home buyers a one-off payment of $10,000 toward their purchase price for buying or building their first home when they buy a brand-new home that is valued under $750,000.

First Home Buyer Assistance Scheme

Under the First Home Buyer Assistance Scheme, new buyers may be entitled to a concessional rate or even a complete exemption on paying transfer duty (also commonly known as stamp duty), which can be a significant cost.

First Home Super Saver Scheme (FHSS)

The FHSS is designed to help first home buyers save their deposit faster by letting them save it inside of their superannuation. This can potentially boost savings by as much as 30% compared to a standard saving deposit account. It applies to voluntary super contributions, which can then be withdrawn without penalties to be used for a home deposit.

If you’re looking to buy or sell in Sydney’s eastern suburbs contact my team today.