Hammered by investors, first home buyers are looking for smart ways into the property market

It’s a tough ask, but first home buyers are defying the odds to get their break in the Sydney market. Sure, often getting Mum and Dad to help. 

But others are using different and innovative ways to break through. Buying with friends, setting up granny flats in the parents’ back yard and even focusing on areas where there are a large number of new developments. They’re also identifying properties where buyer interest had dropped off at the last minute, and negotiating with agents ahead of auctions.

After a year of getting hammered at auctions by investors, Ivan Taylor, 32, snapping up two-bedroom 1990s-era Rosebery apartment for $712,000 this week before auction. “There was a lot of interest early on, but in the end there was just us and one other person,” he said.

“It was a big block and we offered $10,000 more than the apartment that sold next door last year.”

The hairdresser had rented a rundown inner-city shop, working 14-hour days and six-day weeks over two years to save the deposit. “It was all worth it,” he said.

Another first-home buyer, lawyer Vanessa Bateup, also bought this week ahead of auction. “I’ve been looking for about a year – it’s been excruciating – absolutely, and I hate investors,” Ms Bateup said.

She also “switched strategy” – switching from apartments to small terraces, finally buying a “rustic” two-bedroom cottage at 21 Woods Lane Darlinghurst for about $800,000, having given up competing for apartments at auctions. “Investors are pushing up the price of flats and they sell for $100,000 to $150,000 above the price guide,” she said.

“In the case of small terraces, you’re only competing against one or two other buyers and they are not usually investors so the competition is not so hot.

“Investors don’t want the hassle of repairing terraces – they want the strata company to take care of all that for them – but you save $5000 on strata fees per year in a terrace.”

Bresic Whitney agent Nic Krasnostein, who sold the terrace, said another factor in Ms Bateup’s favour was that the property was tenanted and wasn’t attracting a massive rent. “It was leased at $650 a week, so it wasn’t a great yield in its current form .. it was also committed for another six months and it needed a bit of work.”

That wasn’t an issue for Ms Bateup who rents elsewhere and will simply move in when the lease expires.

Others are bringing in professional help. PR consultant Alex Watson, 30, and her engineer husband, Dan, turned to buyer’s agent Patrick Bright, who helped them buy a one-bedroom Cremorne apartment for more than $600,000 two weeks ago. “We both work in busy jobs … our property purchase happened extremely quickly.

“Plus, he knew the real estate agent.”

Mr Bright says his fee is two-and-a-half of the purchase price, plus GST and he helped them find an apartment that was “value for money”. “If interest rates go up 2 per cent … a lot of first home buyers who have borrowed to their limit are going to be in a lot of trouble, because they are going to want to have a family and turn it over in two or three years”.

He says he’s heard of parents building granny flats in their backyard for their children while they save for a deposit but that “makes no financial sense”. “You’ve got to outlay the $150,000 to put that in.”

They may as well help their children buy. Financial consultant, Fiona Semmens, says her parents helped get the deposit together for a one-bedroom Alexandria apartment she bought for $515,000 two weeks ago through Ee Real Estate. “There was always this understanding they would help me out,” she said.

“My parents’ view is that it is important to have that home as an asset and them knowing that my financial situation wouldn’t allow me to get anything that good without their help.”