Can first homebuyers still find value in Sydney?

The termination of the First Home Owner’s Grant has certainly had a negative impact on the number of dwellings being purchased by young new homebuyers. However, while many people have been forced out of the market, there are still opportunities available for those willing to expand their search criteria.

RP Data research, in an April 2010 report, showed that Australia’s housing market is still growing with property values increasing 11.8 per cent over the 12 months to January 2010. However, for those buyers still in the market, conditions have improved as competition for property has reduced and the possibility of further interest rate movements remains in the back of many buyers’ minds.

On the assumption that Sydney is the least affordable Australian city to live in, how then can first homebuyers enter the market? Research shows that despite the increase in value, there are still many opportunities for first homebuyers to purchase properties in locations at, or around, the average affordability range of a first time buyer. Let’s find out where these opportunities exist.

Firstly, let’s look at a couple of the key findings from the RP Data research about Sydney as a market and its ability to support first homebuyers. The most interesting point to note here is that when it comes to first homebuyer purchasing options, Sydney leads the way. Over the second half of last year there were 8,712 houses and units sold across Sydney that were within 10 per cent of the average first time buyer price.

Within Sydney, the average purchase price of a dwelling for first homebuyers was $388,167.
Sydney recorded 4,118 house sales and 4,594 unit sales within plus or minus 10 per cent of the average first homebuyer purchase amount during the second half of 2009.
For houses, only 33 of these sales have occurred within suburbs less than 10 kilometres from the Sydney CBD.
For units, 1,265 sales have occurred at a distance of less than 10 kilometres from the Sydney CBD.
39 Sydney Local Government Area’s (LGA’s) have recorded house sales within 10 per cent of the average first home buyer purchase amount during the last six months, whilst 43 LGA’s have recorded unit sales within 10 per cent of the first home buyer average.
House sales priced in the first time buyers range were most prominent in the Blacktown (13.9 per cent), Fairfield (11.4 per cent) and Penrith (8.8 per cent) LGA’s.
Unit sales were most prominent within the City of Sydney (10.2 per cent), Sutherland (8.4 per cent) and Parramatta (8.2 per cent) LGA’s.

Two interesting facts to glean from the raw data:

Firstly, The City of Sydney saw 468 units sold, which is certainly a destination closer to the CBD than anticipated and potentially an area that may see excellent capital growth over time; and
Secondly, the real bulk of houses changing hands remain in the 20-30 kilometre range from the CBD. With the expansion of the cities of Parramatta this presents a real opportunity for those looking to enter the market for the first time.

So opportunities do exist – first homebuyers should therefore remain positive, do their homework and never be afraid to ask questions of those who do this everyday.

For some interesting reading and further research, the latest Your Investment Property magazine features the lead story “133 Top CBD Suburbs under $300k”. The article comes from a report prepared by RP Data and states there are 45 suburbs around the Sydney metro area where the median house price is less than $300,000 with the majority of these accessible to train and major road networks.

To discuss how you could become a property owner, please contact a Mortgage Consultant on 02 9466 8200 or email us at info@mortgageport.com.au. Our Mortgage Consultant will arrange to meet with you to work out which investment loan product suits you best. They can also help you calculate how much you can afford to borrow.