In Sydney, the first home buyer segment of the residential market has seen substantial growth from the 2015 to the 2016 financial year. Of the top 20 suburbs for first home buyer grant recipients in the 2015 financial year, 15 saw double digit increases in the number of grants received. These figures show that first home buyers remain as one of the primary pillars of the residential housing market.
Of the top 20 suburbs of recipients of first home buyer grants, half are located in the outer South West and North West regions of Sydney. The cause of such a trend is likely the result of such regions containing residential housing developments within the age range of 5-10 years old. Developments in these areas are attractive to first home buyers who may have a young family as they are usually within the vicinity of schools and other infrastructure.
Based on the location of the suburbs the first home buyer grant data can be segmented into two types of development – greenfield and infill. Observations of greenfield development figures indicate that the urban fringe is still advancing which is evident by the 11% increase in grants for buyers in greenfield locations from the 2015 to the 2016 financial year.
Although the urban fringe is advancing, the substantial increase in apartment projects suggests that vacant space in established suburbs is subject to substantial demand from first home buyers. There was a 56% increase in the number of first home buyer grants for major redevelopment projects in the 2016 financial year. The largest number of first home buyer grants were concentrated in the Liverpool CBD and Wolli Creek. Both of these locations provide rail stations, and price points that meet the $750,000 threshold for the first home buyer grant. These observations can suggest that as the rural urban fringe advances, Sydney’s residential pockets are still being filled in and utilised appropriately. The observations of the greenfield and infill project data may also suggest that first home buyers are trading off their travel time to established urban and business centres for more affordable housing in the fringe of Sydney.
The rise in first home buyer numbers has occurred despite the evidence of solid price growth for both new house and land packages and new apartments. The distinction for new housing is that first home buyers can trade off purchase price against dwelling area, in order to best achieve a point of entry into the property market, yet still achieve the benefit of close access to transport networks and retail services.
First home buyer demand in the outer and rural urban fringes of Sydney is likely being fuelled by the promise of improved connectivity to and throughout Sydney’s major transport arteries. This improved connectivity has been realised by the commencement of transport infrastructure projects such as Sydney Metro and the upgrades to Sydney’s motorways. As the urban fringe continues to advance, the nature of the projects within older industrial areas can be adapted to the needs of first home buyers, but only to the extent that the process of redevelopment is allowed to continue. In this respect, there is an enduring need to allow new projects to reach lower price points, through the combination of having plentiful sites for redevelopment and permitting smaller floor area per dwelling.
About the author:
Andrew Toor is a recent addition to the MacroPlan Sydney team. He joins as an Economic Analyst.