The PROPERTY DOCTORS, Sydney Australia Novak Properties
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The PROPERTY DOCTORS, Sydney Australia Novak Properties
NOVAK NEWS: First Home Buyers in 2025 — A New Reality!
The property landscape for first-home buyers has transformed dramatically, with profound implications for anyone looking to step onto the property ladder in 2025. Gone are the days when purchasing your first home meant being in your mid-twenties with a modest deposit saved over a few years. Today's reality is starkly different.
Sydney's first-time buyers are now predominantly in the 30-40 age bracket, having spent between 6-10 years accumulating enough savings for a deposit—more than double the 3-4 years it took a decade ago. With median house prices hovering around $1.6 million, the mathematics are daunting. A 20% deposit means having $320,000 ready to go, an almost impossible feat without additional support.
This financial hurdle has given rise to what's now known as "the Bank of Mom and Dad," Australia's ninth largest property lender. The statistics are eye-opening: 60-70% of first-home buyers receive parental assistance in some form. Rather than viewing this as exceptional, the experts suggest normalizing these conversations about family support, acknowledging it as a common pathway into today's property market.
Strategic approaches are becoming increasingly sophisticated among first-time buyers. "Rent-vesting"—buying an investment property while continuing to rent elsewhere or live with parents—has emerged as a popular strategy. Many buyers are leveraging government incentives by initially moving into their purchase (sometimes just before deadline requirements) before converting it to an investment property to maximize tax benefits and capital gains exemptions.
Recent interest rate cuts have injected fresh energy into the market. With each 1% reduction in rates translating to approximately 10% more borrowing capacity, previously sidelined buyers are returning to auctions and inspections in force. This timing creates both opportunity and urgency for first-home buyers, particularly in supply-constrained areas like Sydney's Northern Beaches.
Ready to take your first step into property ownership? Speak with a mortgage broker, explore government assistance schemes, have honest conversations with family about potential support, and remember—successful first-home buyers today combine multiple strategies with decisive action. The property market waits for no one, especially with increasing competition from returning investors.
Good evening, guys. We're talking about the changing demographic in first-home buyers this evening. Stay tuned. Some of these facts will shock you, but this will hopefully prepare you if you're about to step first foot into the first-home buyer journey.
Speaker 2:Thank you, I'm the ringleader, so let's hit it, alrighty hilarious.
Speaker 1:How are you.
Speaker 2:Bids. Very good, very good. How are you doing today?
Speaker 1:Yeah, good. Good, we kind of spoke about this this morning actually, um some changing demographics, with parents helping kids get into property, but we're gonna spend the next few minutes talking about first home buyers, the changing landscape and demographic with um 2025 very much, very much, let's, let's hit it off.
Speaker 1:It's a new reality, that's for sure. Like the, you know the stepping stones to getting into your first property is near impossible without taking advantage of government incentives and grants, assistance schemes on the table. But I think it might be helpful for people just to you know, understand from an agent's perspective, what's normal and what's not normal these days. Um, so people don't feel like they're on their own yeah, very much.
Speaker 2:I think, uh, sometimes you need to let them know as well, uh, because they are used to getting this one thing, like you know, almost like having like this, so like they don't out there and what other other possibilities, and I think it's a good to lay it out there yeah, absolutely.
Speaker 1:I mean, first of all, uh like, comparing to a decade ago, the statistics tell us that first, home buyers are getting older in sydney, yeah, so we're dealing quite often with a young family. You know it's not. It's no longer a 25, 30-year-old, it's now 30 to 40 years old. That is the trend. So people are getting older and with that people are not necessarily just going for an entry-level property. People are holding out longer and saving more to try and buy a forever home or a home that's going to last them longer than just an initial starting point in the market.
Speaker 2:Yeah, that is very interesting. So the first one by the age is increasing.
Speaker 1:The age is increasing, that's you know. Yeah, that's for certain.
Speaker 2:Do you think that's because of the living costs that's rising up or the interest rate that are uncertain?
Speaker 1:well, it's funny like the. The point two on the list is the time to save for a deposit. Um, it it was. It was, uh, three to four years old as an average, but now it's six to ten years old. Um, to save a 20 deposit in sydney and you look at the median house price and there's no wonder why. But that's where the assistance schemes come in. They're trying to sort of shave years off that and try and get people into the market quicker. But yeah, I would say cost of living has impacted.
Speaker 2:Highly, yeah, but it's good Like without the government schemes. I think there are lots of things that normally people take lightly. Yeah, you know things like this, the deposits, and you know the lmis and lots of the other things that the government provide, and the thing is they only make it better every year. I think it's easier to buy your first home, uh, with their lots of things, uh. So, yeah, I'll let you kick off with a few things. What, what do you think?
Speaker 1:um, another. Another thing that shocked me, and we spoke about it this morning, is the bank of mom and dad. They're now the ninth biggest lender when it comes to guarantees, small loans and like gifts. In Australia it's like the banks of mom and dad are helping 60 to 70% of first home buyers, so six or seven out of 10, there's some kind of parent assistance of first home buyers of six or seven out of ten.
Speaker 2:There's some kind of parent, parent assistance, like even on us being in the field, like almost half of the people that are buying for, like their first term, their mom and dad are all just very good uh yeah, old one there a property for 950 in dy, very close walking distance to the beach, and my mom and dad pretty much did all the heavy lifting yeah, like I think, normalize that process yeah, I think it'll definitely help.
Speaker 2:Like I know, there's a big trend, like you know, to kick, kick the bird out of the nest very quickly. But I think these people are slowing down the kicking out process a little and even if they do, like people that normally downsize very quickly, uh, they're keeping their homes. They're saying, oh, the kids might return. Yeah, there is a bit of change going around another.
Speaker 1:Another thing in addition to that is um, kids, uh, or you should say first home buyers, and not just kids. First-home buyers are getting into the marketplace and not necessarily moving in, so they are rent vesting for the first 12 months or moving in initially and then renting it out after, to claim the benefits of having moved into the property, then have the next six years capital gains free, but then switching it back to an investment property. So they've got a you know stable income, generating some cash flow, living with the parents for a little while longer and not having the extreme you know the extreme reality of moving in straight away and then having to pay mortgage outgoings and living expenses.
Speaker 2:Definitely and I can see lots of clever things these days Like even first-time buyers, they know a lot of the facts and figures. I think social media had made it easier as well. Like you know, there's lots of things people can work around with numbers, like I mentioned, reinvesting, for example. That was not very normal. Like you know, people think as a first-time buyer, once you buy it, it's my home, you have to move in straight away, which not many people are aware that you know you can move in anytime between the first 12 months or the first 11 months. So which I'm seeing these days that people they let it rent out still stay with their mom and dad and once the kind of deadline happens, then they slowly move in yeah, yeah, yeah, I'm finding buyers asking some really good questions and they're speaking to their accountants um, you know, they're talking about depreciation if it's a newer building.
Speaker 1:Um, they're talking about the capital growth and, like the tax benefits, um, if they're to. You know a in a particular kind of way. So you, you're only a first home buyer, um, you, you know once, and then you've got a 10 year period where you can't be. You know, having lived in an Australian property, um of your own, so it does reset, but you're gonna wait 10 years for that benefit. So, people, are you lot of due diligence and time up front getting in the right place?
Speaker 2:Definitely so. Does that mean that if someone has bought a property, let's say in the 80s, and they've lived there forever and they're looking to downsize into an apartment, they could be qualifying for a first-home buyer?
Speaker 1:No. However, if they've purchased in the 80s, sold that rented since uh, since the 80s 20, 30 years, they may be eligible to get back in under a new first home buy grant. So if they've not owned a residential property for more than 10 years, or they've they've owned one in the past then rented um the remaining of their years, they may be eligible. So really good to speak with a mortgage broker if you're unsure, and there's only a set number of you know assistance scheme places each year, depending on what grant or assistance scheme you're going for. So that's the best thing you can do.
Speaker 2:That's great. That's great, great info. Lots of things that you have to be careful and the buyers you have to be careful. And now, with two interest rate cuts this year, we can see ourselves. There's a lot of confidence in the market rumble going around, like you know. The open home numbers are bigger. The auctioneers are saying they are more, uh, registered bidders and all those things and I can like. Personally, I'm seeing more investors out there, uh, custom buyers. So I think the message is for anyone looking to buy the first um, buy it now, buy very quickly yeah, well, for for every one percent change in the cash rate it reflects a 10 difference in borrowing capacity.
Speaker 1:so if we get another uh 0.25 rate cut, um, you know we're on track to. You know, having a one percent change in a in a positive direction, um, since you know the beginning of the year, you can have at least 10% more borrowing, and I think that's why you're finding investors stepping back into the marketplace and you're finding first-time buyers who are previously priced out but waiting on the sideline not just for prices to maybe come down, but more so for their borrowing to go up. They'll come back in and that adds a surplus of buyers and on a market like the Northern Beaches, where it's supply and demand that's a big part of prices and competition.
Speaker 2:Yeah, and it's very, very true. I was looking literally two days ago to see okay, if I'm a first-time buyer and I'm looking for a two bedroom unit under 850.
Speaker 1:Yeah, One, wow, wow.
Speaker 2:That that blew my mind, Like if I had 850, we, like the reason I did 850 was I just took like average income of a person.
Speaker 2:I, like you know, put it through some calculators and said, okay, 850 is comfortable and then, looking at the unit because you know I might be looking to start a family and there was one in DY, basically, which is the best to enter in the market in Northern Beaches, so that kind of caught me by surprise. So I think there either has to be change in tactics or a few things that I think definitely are changing for store buyers.
Speaker 1:Yeah, it's got to be done as a stepping stone approach though, because Sydney's median house price is 1.6 million dollars. So even if you've got, you know, a 10% deposit, you're doing extremely well. But assuming you don't take advantage of any assistance games and you can get a 20% deposit, together that's 320 grand. I don't know anyone that's walking around with that kind of money in the bank for their first property, unless, of course, they've won the lottery, um or uh, you know, again got a loan from them, from the bank of mom and dad definitely.
Speaker 2:I think mom and dad bank's probably the best and the interest rate is not very, very lovely yeah that's, but that is the reality.
Speaker 1:You feel like it's normalized the process of taking helping hands, and it's not just about money, but it could be the advice, or it could be someone backing you in your corner. And yeah, speak with a mortgage broker before you go into anything else.
Speaker 2:Yeah, definitely. You've always got to be clever while buying your first property, because it'll either leave a very good taste or a very bad taste. So you've got to be careful where you set your first foot going around, because I've seen people that have done extremely well. Like you know, they plan every move. They buy right. So I think people don't make money while selling.
Speaker 2:I think they make money while buying, because you've got to buy smart yeah very well said, I think as a first-time buyer, you've got to be very smart and very quick and with these days I'm seeing a lot of buyers doing their research and due diligence fairly quick than before. Thank you, bids, no worries. Thank you, billy. It was a great, great chat and I think we should see more first-time buyers out there plenty more, plenty more.
Speaker 1:Definitely have a good uh. Have a good evening easy.
Speaker 2:Thank you, billy, take care good night. Outro Music.