Buying your first home is a big financial decision and it can feel daunting if you don’t have all of the information you need.
Here are some key things you need to know about buying your first property in Sydney’s inner city.
First Home Owners Grant
If you’re buying a brand-new property in NSW or building your own home, you might be eligible for the First Home Owners Grant (New Homes). The current grant amount is $10,000 and is capped at $600,000 for purchases of new homes, or $750,000 if you enter into a contract to build or are an owner-builder.
First home buyers looking at existing properties fall under the First Home Buyers Assistance Scheme, which gives eligible purchasers exemptions on transfer duty on properties valued up to $650,000 and concessions on duty for homes valued between $650,000 and $800,000.
With a current median price of $661,000 for a 1-bedroom apartment in Alexandria, it is more challenging to buy within the eligibility criteria in the inner city, but not impossible.
Choosing a suburb: housing stock, lifestyle and amenities in the inner city
Deciding on a location is just as important as the property itself, so take some time to consider the right suburb. Alexandria and Erskineville housing stock offers plenty of options for first homebuyers to find the right property, as well as providing the lifestyle benefits that contribute to long-term enjoyment. The inner city is home to some of Sydney’s most popular cafes and parks, as well as providing a host of transport options through cycleways, bus routes and a number of train stations in walking distance.
Strata vs Torrens title: what’s the difference?
It’s important to understand the differences between the types of property ownership, or “titles”, and what your rights and responsibilities are within each before you buy.
The most common type of title in Australia is called Torrens title. It allows you to own the property and the land it sits on, as you generally would with a house or sometimes with townhouses.
If you’re purchasing a unit, villa or townhouse, you’ll most likely be buying under strata title, meaning you own the inside of your property and have co-ownership of common spaces. This co-ownership is usually managed through an owners’ corporation, which comes with levies and by-laws. Find out more about the requirements of strata title here.
The inner city market right now
There are two key ways to make money from your property. If you’re planning to buy it as an investment property there is rental yield and regardless of whether you rent it out or are planning on living in it, there’s capital growth. And both these reflect a healthy market in Sydney’s inner city.
For example, Alexandria’s rental yield is currently in a good position, at 4.1% for units and 2.8% for houses, compared to Sydney’s overall rental yield of 3.57% at the end of 2017. This makes the inner city a great option if you decide to rent out your property in the future.
Annual capital growth is also strong in the inner city, at 9.81% for houses and 7.35% for units for Alexandria. This refers to how much value is added to the property each year, which is important if, or when, it comes time to sell.
Alexandria property prices, may be high, but like many other suburbs in the inner city they do hold or increase their value over time for a positive long-term investment.
What’s the process for buying your first home?
Now you know what to look for when buying your home, you can start the process. Below is a simple summary of steps to buying your first home:
- Apply for a loan or pre approval
- Look for property, including searching real estate listings, attending open inspections and speaking to local agents in your target area
- Express interest in a property
- Check the contract of sale with a solicitor or conveyancer
- Arrange inspections, such as building, strata and pest inspections
- Make an offer or bid at auction on a property you like
- Exchange contracts and pay the deposit
- Pay stamp duty and other up front costs
- Take out insurance on the property
- On the day of settlement, the transaction is completed. Do a final check of the property to make sure everything is intact.
Housing NSW has more details here, or you can also contact me for a chat on the process.