The median price for a one-bedroom apartment in Sydney has increased $200,000 in four years, leaving many first-home buyers in a difficult situation as even entry-level homes are becoming unaffordable, new data from Domain Group shows.
The new median price of $630,000 for a one-bedroom apartment in Sydney means that more first-home buyers are becoming ineligible for the stamp duty concessions designed to help them enter the property market, which is currently capped at $650,000 on new homes.
According to recent Domain Group analysis, it now takes someone earning an average salary four years to save a 20% deposit for a one-bedroom apartment. This is provided homebuyers can afford to put aside close to $540 a week (which is a third of their pre-tax income) and prices don’t go up. Adding stamp duty to the equation means saving for a 20% deposit would take closer to five years.
“Is it any wonder there’s record low numbers of first home buyers in Sydney?” observed Dr. Andrew Wilson, chief economist at Domain Group. “Even on a measure of one-bedroom apartments [prospects are pretty] bleak.”
In areas such as Hornsby, Asquith, and Baulkham Hills, which are situated more than 25 kilometres from the CBD, one-bedroom apartments often sell in excess of $600,000. Aside from being exorbitantly priced, one-bedroom apartments aren’t exactly the best choice for first-home buyers with children, noted Wilson.
Despite these apparent drawbacks, the appetite for one-bedroom apartments has shown no signs of slowing down.
One of the hottest developments in Macquarie
Park right now is Prime. In the first week of November, more than 200 of Prime’s off-the-plan apartments were sold in less than two hours. Prime was predicted to appeal to younger buyers, and the average price paid for a one-bedroom apartment ranged from $653,000 to $850,000, depending on whether it had a study. Two-bedroom apartments were selling for $1.04 million and more.
These high-end buyers would not have been eligible for stamp duty assistance from the government. Those who spend south of $550,000 on a new home are able to avoid the stamp duty altogether, and those spending north of $650,000 are eligible for a concession.
A financial grant of $10,000 is on offer for new properties, provided they fall under the first-home owner grant cap of $750,000.