Despite Sydney being the least affordable city in Australia – with only 3.8% of home sales affordable for median-income households, according to PropTrack’s recent Affordability Hotspot Report – first home buyers still have hope.
The report highlighted that the most affordable parts of Sydney where first home buyers will have the most success are to the west and south-west of the city.
Affordable suburbs in Sydney for first home buyers
Parramatta is the most affordable region in Sydney, with median-income households able to afford 9% of home sales.
Other suburbs in Sydney known for being affordable for first home buyers were listed in Domain’s recent House Price Report. It revealed there were still nearly 200 Sydney suburbs where the median house or unit price sat below $1 million.
The data showed that the most affordable houses were in Lethbridge Park, 40km west of the CBD, with a median of $660,000.
In Darlinghurst and Points Point, both just one kilometer away from the Sydney CBD, the median unit price was about $914,000 and $915,000 respectively.
In Kingswood, 52km away from the city center, the median unit price was $370,000 and the median house price $740,000.
Lakemba, 13 km south-west of Sydney, had a median unit price of $392,000.
Government incentives for first home buyers
First home buyers can benefit from federal government incentives. Sydney mortgage broker Loan Station can provide detailed advice.
The Home Guarantee Scheme is a government initiative to support eligible home buyers to buy a home sooner.
The scheme includes:
- First Home Guarantee – supporting eligible home buyers to buy a home sooner, with a 5% deposit, without paying lender’s mortgage insurance (LMI)
- Regional First Home Buyer Guarantee – supporting eligible regional home buyers to buy a home sooner, in a regional area, with a 5% deposit, without paying LMI
- Family Home Guarantee – supporting eligible single parents and eligible single legal guardians of at least one dependent to buy a home sooner, with a 2% deposit, without paying LMI
- Help to Buy – intended to support Australians who otherwise wouldn’t be able to purchase a home and is expected to start this year after the passing of legislation. The federal government will support eligible home buyers with an equity contribution of up to 40% for new homes and 30% for existing homes. Homebuyers will need a minimum 2% deposit to participate in the scheme and will have lower ongoing repayments, providing long‑term relief.
Eight tips for first home buyers
1. Do your home loan research
Learning about home loans makes you a savvy borrower and can improve your chances of securing a better mortgage. Understanding the home loan terminology, from LMI to loan-to-value ratio, will also boost your confidence in the application process.
If you feel overwhelmed, Loan Station can guide you through the home loan process .
2. Set a realistic budget
Before you start home hunting, establish a realistic budget. Consider your savings, income and expenses to determine how much you can afford. Set a budget that allows for comfortable living while making mortgage payments.
Don’t forget to include extra costs like stamp duty, legal fees and property inspections in your budget.
3. Save for a deposit
Saving for a deposit is generally one of the challenges for first home buyers. It’s often a good idea to save at least 20% of the property’s purchase price to avoid costly LMI, although there are times when a smaller deposit would be suitable.
Use high-interest savings accounts and create a dedicated savings plan to reach your deposit goal.
4. Get your finances into shape
Before applying for a home loan, ensure your finances are in order. Lenders prefer to lend to financially stable borrowers. They will review your financial records, including your bank statements and credit score.
Maintain sensible expenses in the months leading up to your loan application to improve your chances of approval. Regularly check your credit report, address inaccuracies and consider improving your credit score if necessary.
5. Get home loan pre-approval
Pre-approval is a formal indication from a lender that they’re likely to approve you for a specified loan amount. It’s not a guarantee, but it gives you a clear picture of your budget, preventing you from wasting time on homes you can’t afford.
With pre-approval, you can confidently make offers or bid at auctions, knowing you’re within your financial limits.
6. Negotiate smartly
When making an offer on a property, negotiate smartly. Your research will come in handy here. Consider factors like the property’s time on the market, recent sale prices in the area and the seller’s motivations. A well-planned negotiation can save you money in a competitive market.
7. Get the property professionally inspected
Don’t let your excitement rush you into a purchase you haven’t researched yet. Consider getting a professional building inspection and a pest inspection.
The building inspection examines the property’s physical condition, identifying both current and potential future issues. The pest inspection checks for infestations and pest-related damage, such as termites.
If issues are flagged, use this to negotiate a lower price with the seller or request repairs before finalising the sale.
8. Speak to a mortgage broker
Talking to a mortgage broker like Loan Station is beneficial. We answer your questions and help with the loan application process. We communicate with lenders on your behalf, searching for home loans that match your needs. By understanding your requirements, we offer tailored recommendations.
With numerous home loan options available, a mortgage broker ensures you find one that suits you best.
Final thoughts
Navigating Sydney’s real estate market can be challenging for first home buyers, but with careful planning, realistic budgeting and use of government incentives, homeownership is within reach.
Consulting with Loan Station can simplify the process and help you find mortgage options tailored to your needs. Contact us on 1300 4646 11 or email us at info@loanstation.com.au to book a consultation.
