How first home buyers can get into the Sydney property market
PIA Marketing     Published on  11/06/19

If you’re a first home buyer, getting on the Sydney property ladder could be easier than you think, especially if you’re prepared to think outside the square. We show you how you could take your first step on your property journey...

Where the Sydney property market sits right now

In mid-2019, the Sydney property market has become more affordable than it has been for some time. Record low interest rates and an easing in the average Sydney dwelling price has fallen around 15 per cent since the property market record peak late 2017, according to CoreLogic figures[1].

Applying this average, a property that would have cost $700,000 at the market peak, would now cost around $595,000.

That is great news for people looking to enter the property market for the first time. But it gets even better - especially if you’re prepared to buy a new property.

That’s because the NSW government currently provides generous tax breaks for first home owners who buy off the plan or newly built homes.

Government support for first home owners buying new property

This government support comes in three forms.

1. The First Home Owner Grant (FHOG)

This is effectively a subsidy that goes towards a deposit on your home.

At the moment, the FHOG provides a payment of $10,000 towards the cost of a newly constructed property.

Using the example above, if a buyer were to purchase a property worth $595,000 with a 10 per cent deposit,[2] this would usually mean needing to save $59,500. As many lenders allow you to count the first home owners grant towards your deposit, the effect of the First Home Owners Grant is that you’d only have to save $49,500 to purchase the same new property using a 10 per cent deposit.

2. The Stamp Duty concessions or exemption

For most purchasers, the biggest cost outside of the home itself is usually stamp duty.

But the good news is that the NSW government has abolished stamp duty for first home owners on all homes valued at up to $600,000. It then provides a concessional rate for homes up to $800,000.

Using the same example of a property worth $595,000, this represents a saving of no less than $22,265.

3. The First Home Loan Deposit Scheme

Still finding it tough to save $59,500 plus lenders mortgage insurance? The newly announced First Home Loan Deposit Scheme[3] will help eligible first home buyers purchase a house with a deposit as low as five per cent and without having to pay LMI. 

This could represent a saving of around $10,000.

First home buyers with an income of up to $125,000 (or $200,000 for a couple) will be eligible.

The effect of these changes

The effect of these changes is that a first home buyer could potentially purchase a property worth $595,000 having saved a deposit of just $19,750. That's because they may only need five per cent of the purchase price to qualify for the First Deposit Home Scheme ($29,750) and the NSW government may give them $10,000 of this through the First Home Owners Grant.

On top of that, they could have the opportunity to avoid both stamp duty and LMI through the State government's exemption and the First Home Deposit Scheme, respectively. 

That said, before you assume these schemes apply to you, remember there are some restrictions on the government incentives. This generally includes having to live in the property for a period of 12 months within a year of taking possession.

Buying off the plan: a sound strategy for first home buyers

Alternatively, as a first home owner, buying off the plan could help you take advantage of each of these first home buyer benefits. Also, because you won’t be able to move into your property until it’s constructed, you should have more time to save - meaning you’ll have to borrow less.

The other advantage of buying off the plan is that you’ll be locking in today’s prices. Given that many commentators believe we’ve already seen the bottom of the market, which means you could well see a capital gain on your property even by the time you move in. So you’ll have built equity before you even take possession or make your first home loan repayment.

Another alternative for first home buyers: Buy and Rent (B&R) rentvesting

Another alternative for first home buyers looking to get on the Sydney property ladder is PIA’s Buy & Rent (B&R) model, sometimes known as rentvesting.

This involves buying a property in a location you can afford and renting it out while continuing to rent in the area you want to live.

That way, you can purchase property and start building equity in your first home while someone else pays off your mortgage for you.

One of the benefits of rentvesting right now is that yields on Sydney properties are the highest they have been in some time. Yield is effectively the amount of rent you receive compared to the property value. So someone else will be paying down your home loan more rapidly than previously.

At the same time, because your property is an investment property, you could receive the tax advantages associated with negative gearing, meaning that you may not have to outlay a considerable amount each month.

That said, if you choose to buy and rent you may not be able to take advantage of the first home owner benefits. So if you’re considering this approach you should always first speak to your financial adviser or accountant.


Read more about rentvesting

Want to know more?

If you’d like to know more about strategies for getting into the Sydney property market, please get in touch


The information contained in this article is intended to be of a general nature only. It has been prepared without taking into account any person’s objectives, financial situation or needs.


  • CoreLogic figures
  • RevenueNSW calculator

[1] Corelogic Housing Market update May 2019. Median dwelling values and price corrections vary by region and suburb.

[2] Note: deposits can vary. Check with your vendor and your financial institution on the deposit required. Deposits below 20% attract LMI

[3] The First Home Loan Deposit Scheme is due to commence 1 January 2020

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