If you are looking to buy your first home in Sydney without affecting your savings, now is the right time. First-home buyers can find the most affordable suburbs in Sydney for under $1.5 million. With the proposed expansion of the First Home Guarantee Scheme, first-home buyers will have more choices for the best homes.
The Affordable Housing Problem
Earlier, the eligible first-home buyers could only purchase homes priced up to $1.3 million with a 5% deposit. This made it difficult to balance both budget and lifestyle, especially as Sydney’s property prices kept rising. In such a case, first-home buyers had no choice but to rely on either high-paying jobs or parents’ money.
Meanwhile, Sydney’s current median house price is $1.69 million, and the median unit price is $823,467. This means that without government support, many buyers simply couldn’t enter the market.
The Proposed Expansion Of The First Home Guarantee Scheme
But now, the Labour Party has proposed the expansion of the home-buying limit to $1.5 million across Greater Sydney. The party also added that the eligible buyers will not have to pay any LMI (Lender Mortgage Insurance).
So what will it mean to first-home buyers?
With more government support, first-home buyers will now have access to previously unaffordable suburbs. This support will also enable them to stretch their budget, consider new locations, and potentially make room for future investments.
Some suburbs that may now come into reach:
- Gosford
- Sutherland
- Canterbury-Bankstown
- Parramatta
- Western Sydney
Even some high-demand suburbs have now become cheaper.
Terrigal, Bangor and Loftus: $1.5 million median house prices
Padstow: $1.49 million median house prices
Panania: $1.49 million median house prices
They can also consider unit purchases in the following beachside suburbs:
Waverley: $1.5 million
Breakfast Point: $1.49 million
Woollahra: $1.46 million
Bondi Beach: $1.45 million
These changes may not get you a backyard, but they offer a real shot at homeownership. Additionally, the proposed policy has also promised to remove the income eligibility limit of $125k for individuals and $200k for couples. That means more people can now purchase their first home with relaxed income criteria.
Some Controversial Concerns
While the proposed policy benefits first-home buyers, there are still some concerns.
Risk of More Borrowings
Only a 5% deposit will indeed speed up the buying process, but if you borrow over $1 million, it will increase the financial pressure. Without careful planning, your monthly repayments could affect your budget and not provide any financial benefits.
Meanwhile, if you are drawing from your super, keeping the maximum limit at either 40% or $50k becomes important.
Rising Property Prices
With more housing demand in Sydney, the prices will also shoot up, which will likely affect your savings. That means the current market conditions may benefit sellers more than homebuyers.
For instance, the reduction in the deposit will push more homebuyers to buy a home. Sellers may then raise prices in reaction to the circumstances. Thus, it’s important to choose suburbs that fit your budget.
No Hope in High-Cost Suburbs
Some first-home buyers may still struggle to afford homes in expensive suburbs despite the policy changes. For example, suburbs like Dulwich Hill or Camperdown may remain difficult to afford.
As a result, this will only drain out their savings while increasing the debt burden on them. In such a case, many buyers may consider settling for outer suburbs or apartments, not aligning with their goals.
So, Is It A Housing Affordability Solution Or Just A Myth?
No doubt, the homes in Sydney will get cheaper with the proposed expansion of the home value limit to $1.5 million. However, the homebuyers must think carefully about concerns like rising property prices, more borrowing, and draining savings.
At this time, what matters most is the right guidance.
Contact Nfinity Financials, or call us at 1300 GET LOAN, 0456 456 267 to discuss your next financial decision now.
