5 Facts About First Home Buyers

July 29th, 2021 - by Brad Gillespie

Low interest rates, falling unemployment, lower levels of housing stock, growing consumer confidence, and an accumulation of household savings during COVID-19 restrictions in 2020 have kept Australia’s property market buoyant.

Many first home buyers are taking advantage of conditions to jump on in.

Here are five facts about first home buyers today:

1. First home buyers are eligible for a variety of grants and concessions

The state government’s First Home Owner Grant (FHOG) was introduced on 1 July 2000 to offset the GST on home ownership. First home buyers can receive $10,000 off the property’s purchase price if they meet the following eligibility criteria:

  • Buying or building your first home
  • It's a new home that no-one has lived in before
  • It's worth no more than $750,000
  • Find out about more requirements

And under the First Home Buyers Assistance Scheme, which can be combined with the FHOG, first home buyers may be eligible for a full or partial exemption on transfer duty, also known as stamp duty, providing:

  • They are buying their first home in Australia
  • Its value is no more than $1,000,000

The federal government’s First Home Super Saver Scheme allows first home buyers to save money for their first home inside of their super fund. This can help first home buyers save faster with the concessional tax treatment of superannuation. Note that some changes have been made to this scheme since it was first introduced in 2019.

2. Some first home buyers are entering the market sooner

Federal government initiatives to support the property market and first home buyers, such as the First Home Loan Deposit Scheme (FHLDS) and its New Home Guarantee are also giving some first home buyers a leg-up to get into the market sooner - and it seems they are working.

“Our data shows CBA customers who have used one of these homebuyer initiatives have been able to enter the property market nearly five years earlier on average than they would if they saved for the standard 20% deposit,” Commonwealth Bank’s Michael Baumann told the Guardian Australia.

3. ‘Bank of Mum and Dad’ still critical

Despite the concessions available, the surge in property prices across Australia, and particularly in Sydney, means that many first home buyers are having to rely on family assistance.

According to Martin North, founder of Digital Finance Analytics (DFA), in the March quarter of 2021, just over 60 per cent of first home buyers received financial assistance from their parents. DFA’s figures, based on a rolling survey of 52,000 households conducted by the researcher, show that total lending by parents makes them the ninth-largest mortgage lender, just behind Suncorp Bank.

4. First home buyer demand high but may wane as investor interest grows

According to data from the Australian Bureau of Statistics (ABS), in May 2021, the number of owner-occupier first home buyer loan commitments fell 0.8% in seasonally adjusted terms. However, they remain at historically high levels, particularly in New South Wales and Victoria. The cessation of the HomeBuilder grant and other state government initiatives have influenced falls in Queensland, Western Australia and South Australia.

Data from the REA Insights Housing Market Indicators Report July 2021 noted that in June 2021, first home buyers accounted for 21.9% of email enquiry and investors 18.2% (their highest share since February 2020), but that demand from first home buyers is likely to wane as investors make a comeback in the market, and they face head-to-head competition.

5. First home buyers in Sydney look west

Rising property prices in Sydney has caused some to look further afield. Data from InfoTrack found that seven of the 10 most popular suburbs for first-home buyers in NSW were in Sydney’s west, should suburbs closer to the CBD prove out of reach.

In our market, we’ve found inner-city Sydney suburbs are particularly popular with first home buyers seeking units, with modern apartments in Erskineville, Alexandria, Waterloo and Green Square ticking a lot of boxes. In the inner-west we see Marrickville and Dulwich Hill getting a lot of traction with older first home buyers looking for houses.

Want to learn more about buying your first home in Sydney’s Inner City and Inner West? Contact our team today.