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First-home buyers hone in on outer suburbs amid a burst of incentives

By George Hadgelias

First-home buyers are set to continue to dominate the property market in early 2021 as those looking for houses target outer suburbs where they can make the most of government grants and discounts. 

Executive manager of economic research at Cameron Kusher said first-home buyer demand has been buoyed by historic low borrowing costs, a lack of investors and the large number of government incentives, particularly for buying and building new homes.

New data shows people looking to buy a house as their first home are mainly focusing on the more affordable outer suburbs where they can take advantage of the federal and state government grants for new builds.

Mr Kusher said the federal government’s HomeBuilder scheme for new builds had pulled forward demand from first-home buyers, who have been dominating Australia’s property market.

State and federal government incentives such as stamp duty reductions and the first home loan deposit scheme had also assisted first-home buyers, he said.

“Mortgage interest rates are the lowest they have ever been, which makes it attractive to try and enter the market now,” Mr Kusher added.

He said the lack of investors had also given first-home buyers some breathing room, given they typically competed for similar stock.

Mr Kusher expects first-home buyer activity will remain elevated over the coming months but predicts demand will drop once the extended HomeBuilder scheme ends on 31 March.

“I expect activity from first-home buyers to remain strong early in 2021, however, thereafter we probably start to get to a point of exhaustion of the supply of first-home buyers given these incentives have pulled forward so much demand.”

The $25,000 HomeBuilder grant fell to $15,000 for new build contracts signed between January and March, but the property price caps in NSW and Victoria increased to $950,000 and $850,000 respectively and the construction commencement timeframe was extended to six months.

“While the grant will be smaller, the higher price points will allow more buyers to access the grant,” Mr Kusher said.

“We had heard, particularly in Sydney, that for many developers there was simply no stock priced at under $750,000 for first-home buyers.”

Mr Kusher said the return of investors to the market could mean more competition for first-home buyers, with investors more likely to be looking in established and new housing areas as well as regional markets.

First-time house buyers look further afield

Data from shows more first-time buyers enquired about houses in Tarneit, in Melbourne’s outer west, than any other suburb in Australia during 2020.

The 10 most popular areas nationally based on email enquiry on were all outer suburbs in Melbourne and Sydney.

“Outer suburbs have lower price points and are the suburbs where new housing is available so first-time buyers are much more likely to be able to access a majority of the government incentives on offer within these suburbs,” Mr Kusher said.

When it came to units, first-home buyers were mainly focused on inner-city suburbs or those with a lot of new apartments like Parramatta.

“Many people dipping their toe into the market for the first time prefer to purchase units and be amongst all of the amenity,” Mr Kusher said.

Melbourne received the most enquiries nationally from first-home buyers looking for units.

Victoria and NSW dominated the national top 10 lists because their larger populations meant their enquiry levels were higher.

Where are the first-home buyer hotspots?

The fast-growing fringe suburb of Tarneit topped the email enquiries for Victoria – and nationally – as first-home buyers sought to make the most of government incentives.

Reliance Real Estate – Tarneit area manager Abhi Elawadhi estimated first-home buyers made up about 80% of the market.

“Their priority is to utilise the benefits the government is providing,” Mr Elawadhi said.

They could avoid paying stamp duty as Tarneit’s median house price – $570,000 according to – fell below Victoria’s $600,000 first-home buyer exemption cap.

Mr Elawadhi said first-home buyers were taking advantage of government grants for new builds, even on smaller blocks.

“A first-home buyer in today’s market, even if you give him a four-bedroom house on smaller land, he’ll take it because that’s just the need of the hour, where he can claim all the benefits.”

Mr Elawadhi said Tarneit was a more affordable option for first-home buyers in the western growth corridor than suburbs with higher median prices such as Point Cook ($650,000) and Williams Landing ($682,500).

Western Sydney’s growth corridor is also a top drawcard for first-home buyers due to an abundance of new housing eligible for government grants and discounts, with Schofields the most popular suburb for houses in NSW.

Amit Kumar Property principal Amit Kumar estimated as many as 95% of purchasers in Schofields, where the median house price is $842,500, are first-home buyers.

“What Schofields offers for a four-bedroom, double-storey home is pretty good value for a first-home buyer who is looking for a place to live in with the family and kids,” Mr Kumar said.

“Ever since we’ve had the first-home buyers’ benefit with the government grant, it has pushed the demand really, really high because they’re going towards the new homes rather than old, established homes.”

Mr Kumar expected NSW’s increased property price cap under the HomeBuilder extension will continue to drive demand from first-home buyers.

“If you look at the median price in Schofields, we are very well within that price bracket, which means that anyone who is looking to buy, their first pick is Schofields.”

In Queensland, the most popular suburb generating enquiries from first-time house buyers has been Upper Coomera, where the median price is $515,000, on the Gold Coast.

Patrick Donaldson, LREA senior sales consultant at Ray White – Upper Coomera said the easy commute to Brisbane and access to beach attracted buyers to the suburb.

“A lot of people type in Gold Coast, see properties in Upper Coomera, look to see where it is and see it’s the middle point between fun on the weekends and work in Brisbane during the week,” he said.

“It’s become a very popular, established area,” he added.

Mr Donaldson said first-home buyers could get a relatively modern four-bedroom property for less than $500,000 in a suburb with a lot of owner-occupiers and good private and public schools. It was also a short drive to the nearby train station and shopping centre in Coomera, another first-home buyer hotspot.

The southern Adelaide suburb of Morphett Vale was the top suburb for houses for first-home buyer enquiry in South Australia.

The house hotspots elsewhere were the semi-rural suburb of Baldavis in Western Australia, Devonport on Tasmania’s north coast, Ngunnawal in the ACT and the northern Darwin suburb of Muirhead.

The suburbs were ranked by the highest number of email enquiries to agents from people who identified themselves as first-home buyers on from 1 January to 30 November, 2020.

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