Thanks to increasing costs and unaffordability issues prevalent in the Sydney property market, first home buyers are being encouraged to purchase homes further afield in a multi-step approach to finally buying property closer to the CBD.
“They should approach it in a staged way”, Zac Peteh director of Sydney-based mortgage brokerage Mint Equity, told Australian Broker
He referred to the term ‘rent-vestors’ who he said could leverage growth in regional areas where capital costs are a little lower while renting closer to the Sydney metro.
“At least that gives them the opportunity with a low capital base to try and leverage some equity and re-enter the Sydney market. You’re talking about a more segmented approach and building it up in stages rather than going directly for gold.”
While Sydney is ideal in terms of property growth, Peteh said that a strategic approach is required to enter the market in the first place.
There was a trend of more buyers in regions such as the Central Coast, Wollongong and west of Penrith where capital costs were lower than those in Sydney, he said.
“I’ve seen a big trend with family guarantees as well where first home buyers are leveraging off their parent’s substantial equity to buy an investment property initially.”
Amidst hype around Sydney’s dramatic price growth, Peteh said he hoped APRA’s banking restrictions and reductions in offshore borrowing would cool the market just a little to make it more affordable for locals.
“With the increase in stamp duty revenue over the last five years, I’d like to see first home buyers getting out of stamp duty altogether,” he added. “The revenue supports this because they’re such a small percentage of the market.”
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