Experts offer their advice to Sydney's first-home buyers

It seems that first-home buyers might be trickling back into the Sydney market, with recent ABS figures showing first-home buyer mortgage commitments are edging higher. 

But as $650,000 won’t buy you much in Sydney, those new entrants looking to avoid stamp duty need to put careful consideration into where and what they buy.

In a softening market, buyers are increasingly concerned about long-term performance, said buyers agent John Carew from Mayfield Property Buyers

“Twelve to 24 months ago, it was really rare that a first-home buyer was really concerned about the investment potential of the area,” he explained. 

“They just wanted to get in. But now, they’re being a bit more careful. We’re seeing it across the market as a whole.”

Are there any affordable homes in the inner city?

Independent Sydney buyers agent Michelle May said first-home buyers should be able to pick up a good one-bedroom apartment in the inner-west.

And staying closer to the CBD may insulate them from bumps in price growth, as there would always be demand for apartments in those areas, she said.

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“The closer to the CBD, the more protected you are.”

John Carew said many of the first-home buyers he saw were taking that option: “The most important thing is that they really want proximity to transport, they want to be close to cafes, shops, and parks – lifestyle is really important.

“I know that unemployment will be lower and wage growth is higher,” he said, and added that suburbs closer to the city were less beholden to one specific industry, or employer, in particular.

More bang for your buck in western Sydney

Jason Low, client relations manager from Propertybuyer.com.au, said there’s nothing wrong with looking further afield.  

“I’ve heard from buyers agents that you must buy inner city apartments – but lo and behold, that’s where they work, that’s just the area they cover.” 

He said he’d worked with first-home buyers who wanted to live in western Sydney as they worked or had family in the area, and found townhouses or duplexes were coming in under the $650,000 threshold.

Mr Carew agreed, noting areas such as Penrith had entry-level houses priced below $650,000.

“Every buyer is different – family situation, work situation, there’s so many variables. There’s not a one-size-fits-all solution,” he said. “Long-term, if you work out there it makes a lot of sense.”

Edwin Almeida, from Raine and Horne Blacktown, said that areas like Rouse Hill were developing more accessible amenities that were making them more appealing to buyers.

“They have smaller, boutique shopping centres that have coffee shops and entertainment,” he said. “People have all these options around nearby. 

“From a lifestyle point of view – you find that after five, as a city, Sydney’s dead.”

Another factor to consider is the ability of land to hold its value, – and looking further out could allow first-home buyers their own patch of dirt, rather than an apartment.

Mortgage broker Ram Venkatagiri, from Financial Quotient, said some apartments would not stand the test of time.

“I’ve seen issues where the apartment is falling down, the walls are falling apart, and it’s 15 years old. They depreciate and deteriorate very quickly.”

Which suburbs are the best value overall?

Mr Carew’s pick for areas were Marrickville in the inner-west – “You can still get an entry level two-bedroom apartment for under $650,000” – Lane Cove for the lower north shore, and Botany and Maroubra in the eastern suburbs.

“I still think Lane Cove represents good value,” he said, also suggesting that older, double-brick blocks may prove more affordable.

“They’ve been built to last, and you don’t have all the upkeep of gyms and saunas.

“Botany is now how Alexandria was 10 years ago – a lot more cafes and shops, and mums with prams. A lot of families are moving to that area.”

Ms May suggested looking for suburbs with multiple public transport options, which may perform better in a slowing market.

“Just follow the train lines,” she said. “For a two-bedroom house – if that’s what you want, where can you afford? You can cast your network wider.”

Mr Almeida said that in terms of western Sydney, the trick was to look for undervalued suburbs adjacent to more expensive areas.

He suggested Glenmore Park, on the fringe of the M4, Jamisontown and Hassall Grove as suburbs with duplexes or freestanding houses around the $650,000-mark. 

“Around the corner you’ve got homes that are going up to $900,000,” he said.  “Look where things haven’t caught up as quickly.”

Top 5 tips for first-home buyers

1. Look for undervalued suburbs adjacent to pricier areas.

2. Choose an area with good public transport connections.

3. Search further from the city centre to find land at affordable prices.

4. Areas with good employment prospects will see continued demand.

5. Apartments in older blocks may be more affordable.