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A number of Sydney-based suburbs have the potential for growth on the back of first time buyers pushing up demand, according to wHeregroup’s founder and buyer’s agent, Todd Hunter.
Discussing the New South Wales results of a recent survey from Mortgage Choice, which identified that first time buyers are primarily looking to buy in sub-$350,000 suburbs, Mr Hunter told Smart Property Investment that demand on properties in this price bracket will push up prices in some suburbs where purchases of this price are achievable.
This will primarily be targeted in Sydney's West, where the median price is lower.
The Mortgage Choice’s annual survey found that on average, first homebuyers were planning to spend $350,000 on an established property compared to $380,000 for a property bought off the plan, and $360,000 for a newly built home.
RP Data's latest statistics put the median house price for Penrith at $350,000, while units were recorded at $256,000. In Blacktown and Campbelltown the median house prices were seen at $390,000 and $319,975, while units median prices were at the lower bracket of $295,000 and $289,000 respectively.
Many investors have flooded into these areas in the past for their affordability. The inward flow of new owner-occupiers may be a positive to “balance” out the number of renters, he suggested.
Other Australian capitals could experience similar effects if this repeats.
However, new properties where prices have already jumped are unlikely to see further growth, he warned.
“[This is] because developers already know what the first home owner’s grant is doing so they’ve put the house prices up. If you watch the house and land packages prior to the change of the First Home Owners Grant, and then the week of, I’ve seen differences of up to $50,000.”
The survey of 1,000 Australians who were looking to purchase their first home in the next two years also found that the percentage of people looking to buy an established property remained at 52 per cent.
Commenting on the results, Belinda Williamson, spokesperson for Mortgage Choice, said future first homebuyers planning to buy a newly built or off the plan property intend to borrow more than those who are looking to buy an existing home.
Despite the state government’s introduction of the first home buyers scheme to boost housing supply and encourage the buying activity of newly built or off the plan properties, the results show a modest increase, from 13 per cent in 2011, to 15 per cent in 2012 of purchases in these properties.
"[This] could be an indication that the incentives on offer are not enough to change first home buyers property preferences," said Ms Williamson.