First home buyers can realise their dreams

Posted by Paul Ryan • 12 November 2013 • Tags:

Imagine growing up in the capital cities of Australia with the great Australian dream of buying your first house. Is it still a dream or fast becoming a nightmare?

Reviewing property research sites and observing the median house prices in capital cities throughout Australia must be quite daunting for first home buyers. Sydney - $690,000, Melbourne - $595,000, Brisbane - $450,000, Perth - $520,000, Adelaide - $420,000, Hobart - $289,000. This in turn means the median house price is approximately $490,000 in our capital cities.

Most states have provided concession for first home buyers in the form of first home buyers grants, however it is important to note that the concessions are only available when you look to buy or build a new home.


The dream of buying an existing house to start your property journey is even more challenging when you consider what’s required to obtain a home loan.


Most lenders will ask for a 5% deposit before they even look at your home loan application. So if you are looking to buy an existing house in Sydney you will need to save or be gifted, say $34,500, plus the relevant stamp duty. On a house purchase of $690,000 in Sydney the stamp duty is $26,500.

There are concessions on property stamp duty, however, once again it is reliant on you buying or building a brand new home.

Understandably the state governments want to boost the building industry but not everyone wants to live in new housing estates and there is a limited supply of land within 10-15 kilometres of the CBD in most capital cities.

So how can you help guide the next generation of first home buyers to turn their dreams into a reality?

  • They need their parents to educate them on the property market as soon as possible.
  • They need their parents to educate them on what’s required to obtain a home loan and reinforce their dreams can become a reality. Don’t ever let them think it is a pipe dream.
  • Develop a savings plan from as young as 14 or 15 – if they get a job or do work around the house set some challenges so they can only spend 50% of what they earn and save the other 50%. This may create some nice disciplines for later in life (e.g. the perils of credit cards).
  • Seek financial advice on the benefits of foregoing the first home buyers grant and buying an investment property in regional Australia. Some people get hung up on getting the first home buyers grant and don’t allow themselves the opportunity to understand other options to enter the property market. Buying a reasonably priced investment property in regional Australian allows the first home buyer to enter the property market and provides them with the opportunity to pay off the home loan more quickly, generating equity into the property. The equity gained can then be used when they sell the property to buy a house in the city and suburb of their choice.

History has proven the property market is a great way to create wealth. Whilst the first home buyers market may seem clouded there is always a way to achieve your goals.