InfoTrack Reveals What First Home Buyers Really Want
First-time buyers in NSW are overwhelmingly looking to buy a home rather than an investment property, are perfectly pricing their purchases to avoid stamp duty costs and are buying by themselves, according to the exclusive research by InfoTrack.
The latest InfoTrack Property Market Update by CEO John Ahern has revealed that in the year to October’s end, 84 per cent of first-home buyers in NSW purchased either a house (47 per cent) or a strata property (37 per cent) as owner occupiers, despite the growing trend of “rentvesting” becoming a financially viable pathway onto the property ladder. Another 15 per cent are buying vacant land with the plan of becoming an owner occupier.
As property prices have continued to rise throughout 2021, first-home buyer activity has been in decline after peaking in March. Mr Ahern said despite this decrease, those getting into the market know just what they want.
“Buying a first home in a location based on affordability seems to be step one towards owning a property in a more desirable location. Given the recent hike in property prices, securing a first home can really set buyers up with healthy capital gains in a relatively short timeframe. It’s also a sensible move that offers them an opportunity to think about what their second property purchase might look like,” he said.
The types of property first-home buyers want
First homes as stepping stones: 47% of first home buyers are choosing pre-existing stand-alone homes.
The data also showed that the majority of first-home buyers said they would consider paying an average of $600,000 to $700,000 for a home – the top of the threshold to avoid expensive stamp duty fees in NSW. According to the InfoTrack research, only a small percentage of first-home buyers said they were likely to purchase a home above the $700,000 to $750,000 price bracket.
“This strategy tells me these buyers are savvy and want to make the most of every exemption available to them. While it does limit property choices, it ultimately drives first-home buyer behaviour and lightens the load at settlement time when the costs come together,” Mr Ahern said.
How much first-home buyers are willing to spend
Avoiding extra costs: First home buyer budgets hit their limit at the NSW stamp duty threshold.
The First Home Buyer Assistance Scheme allows first-time purchasers to avoid paying stamp duty when they buy either a new or existing home valued at less than $650,000. When buying a home priced between $650,000 and $800,000 they can apply for a concessional transfer duty rate which will be based on the value of the property.
Mr Ahern said another interesting insight from the latest InfoTrack Property Market Update was evident in a snapshot of the first-home buyers themselves. Over the past 12 months, a majority of first-home buyers in NSW (55 per cent) made their property purchase alone, or only listed one name on the title. The revelation could demonstrate a generational shift in what the Great Australian Dream of homeownership means to younger Aussies.
How first-home buyers are starting their journey
Number of buyers per property: More first-home buyers are doing it alone.
“What I see when I look at this data is that property ownership is an attractive investment strategy regardless of whether you purchase independently, or jointly with others. It also indicates that there are more individuals with higher disposable incomes who can afford to buy their first home self-sufficiently,” Mr Ahern said.
Ultimately, the InfoTrack Property Market Update shows that although due to affordability constraints there are less first-home buyers getting into the market than a year ago, those choosing to buy are making calculated buying decisions.
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