5 Factors To Consider When Buying Your First Home In 2023

February 24th, 2023 - by Brad Gillespie

Have you made it your New Year’s resolution to buy a property in Sydney’s inner city or inner west during 2023?

If so, we look beyond the media headlines to tell you the five things we think you need to know about the market right now.

1. Falling prices are actually good news for you

Over the past 12 months, Sydney’s median property price has fallen -13.8% to $999,278, according to CoreLogic. Breaking that down further, the median house price fell -15.0% to $1,205,618, while the median apartment price fell -10.4% to $768,999.

The media tends to paint a picture of doom and gloom for Sydney’s housing market. But you shouldn’t buy into that narrative: falling property prices are actually great news for first-home buyers.

The recent price declines mean you’re likely to be able to get into the property market for much less, and with less fierce competition, than even 12 months ago. You’ll also have to borrow less (which should offset recent interest rate rises).

In fact, if you’re prepared to start out with a one-bedroom home, you can now buy into virtually any area for under $700,000, as the table below shows.

Suburb Median value one-bedroom apartment Median value two-bedroom apartment Median two-bedroom house value
Alexandria $674,000 $983,000 $1,580,000
Waterloo $675,000 $950,000 n/a
Erskineville $695,000 $1,083,000 $1,450,000
Redfern $705,000 $1,100,000 $1,802,000
Rosebery $644,000 $880,000 n/a
Newtown $653,000 $970,000 $1,538,000
Marrickville $605,000 $825,000 $1,575,000

* Source: Domain suburb profiles, accessed 13 Feb 2023

2. You’re more likely to qualify for government help

Lower property prices also mean you’re more likely to qualify for government help, especially when it comes to stamp duty and other upfront costs.

That should be welcome news because saving a deposit - and then having to cover stamp duty on top of that - is often the hardest thing of all about getting on the property ladder.

At the moment, the NSW government waives stamp duty on homes valued up to $650,000, and then a concessional rate applies to homes valued between $650,001 and $800,000. On top of this, the NSW government’s new First Home Buyer Choice scheme offers eligible first home buyers the opportunity to pay an ongoing land tax instead of stamp duty on properties valued up to $1.5 million.

There’s also a chance that you could qualify for the NSW First Home Owner Grant, so long as you buy a new property that’s valued under $600,000.

And, if that’s not enough, the federal government’s First Home Loan Guarantee scheme offers to guarantee up to 15% of your mortgage, meaning you could buy with as little as a 5% deposit without having to pay expensive lenders mortgage insurance.

3. You shouldn’t be put off by rising interest rates

It’s true that interest rates have been rising faster than at any time in recent history - and it’s also true that they may go up further still. But don’t let rising interest rates put you off getting into the market altogether.

While the official cash rate has been lifted from 0.1% to 3.35%, it is still below the 20-year average of 3.84%, and a long way off the double-digit rates we saw in the early 1990s. And, even if the cash rate does go up a little more, most economists agree that it will come down soon.

If you’re concerned about the effect of further rate rises, consider fixing your rate to give you some budgeting certainty. And shop around with the banks or enlist the services of a good mortgage broker. There is still a lot of competition among lenders, and you’re likely to get a good deal.

4. Remember that in the long term, prices tend to rise

While Sydney’s property market has been experiencing a correction over the past 12 months, it pays to remember that in the long term, Sydney property prices tend to rise.

In case you need convincing, a little while ago, we wrote an article about how Alexandria prices had lifted 1,200% over the past 30 years. More recently, we pointed out that in 1977 the median value for a three-bedroom in Marrickville was $37,000. Today it is $1,853,000, according to Domain.

In other words, it’s easy to get caught up in the here and now, but if you step back and take a longer-term view, the reality is that Sydney property has always been - and is likely to remain - a good long-term investment.

5. Remember that our area is likely to be a standout performer

More than anything, we believe the inner city and inner west are poised to be standout performers over the coming decade and beyond.

With a return to normalcy after three years of COVID, the borders are open, immigration is back, and we will see our city’s population swell further. As we do, more people will be drawn to the first-rate lifestyle our area offers.

Where else in Sydney can you have such a cosmopolitan lifestyle that boasts everything that’s great about living in a global city - transport links, cafes, bars and restaurants, galleries, theatres and museums? And yet, we also have great parks, green spaces and room to move.

In other words, this isn’t just a great place to invest but also a great place to live. By buying here, you’re buying into one of the best parts of our city.

Want more?

With prices down and less heat in the market, now could actually be a great time to buy property in Sydney’s inner city and inner west.

If you’re looking to buy or sell in our area, contact my team today.