First home buyers in New South Wales are seeking a home not an investment, with more than half going it alone, according to new data.
The latest InfoTrack Property Market Update revealed in the year to October’s end, 84 per cent of NSW first home buyers purchased either a house (47 per cent) or a strata property (37 per cent) as owner-occupiers.
This is despite the growing trend of ‘rentvesting’ becoming a financially viable pathway onto the property ladder.
The types of property first home buyers want
A further 15 per cent were buying vacant land with the plan of becoming an owner-occupier, the report showed.
As property prices continued to rise throughout 2021, first-home buyer activity had been in decline after peaking in March.
Despite this decrease, InfoTrack Chief Executive Officer John Ahern said those getting into the market knew exactly what they wanted.
“Buying a first home in a location based on affordability seems to be step one towards owning a property in a more desirable location,” Mr Ahern said.
“Given the recent hike in property prices, securing a first home can really set buyers up with healthy capital gains in a relatively short timeframe.
“It’s also a sensible move that offers them an opportunity to think about what their second property purchase might look like.”
How much first home buyers are willing to spend
The data also revealed most first home buyers were prepared to pay an average of $600,000 to $700,000 for a home – the top of the threshold to avoid expensive stamp duty fees in NSW.
According to the InfoTrack research, only a small percentage of first home buyers said they were likely to purchase a home above the $700,000 to $750,000 price bracket.
“This strategy tells me these buyers are savvy and want to make the most of every exemption available to them,” Mr Ahern said.
“While it does limit property choices, it ultimately drives first-home buyer behaviour and lightens the load at settlement time when the costs come together.”
How first home buyers are starting their journey
The First Home Buyer Assistance Scheme allows first-time purchasers to avoid paying stamp duty when they buy either a new or existing home valued at less than $650,000.
When buying a home priced between $650,000 and $800,000 they can apply for a concessional transfer duty rate which will be based on the value of the property.
Mr Ahern said another interesting insight from the update was evident in a snapshot of the first home buyers themselves.
Over the past 12 months, most first home buyers in NSW (55 per cent) made their property purchase alone, or only listed one name on the title.
“The revelation could demonstrate a generational shift in what the Great Australian Dream of homeownership means to younger Aussies,” Mr Ahern said.
“What I see when I look at this data is that property ownership is an attractive investment strategy regardless of whether you purchase independently, or jointly with others.
“It also indicates that there are more individuals with higher disposable incomes who can afford to buy their first home self-sufficiently,” Mr Ahern said.
