Applying for a home loan isn’t a walk in the park for most first home buyers, especially when you’re dealing with low deposit, low income, and even insufficient documentation or requirements.

These will hinder you from progressing towards your homeownership goals, so it’s best to prepare and make adjustments early on. Set aside more money towards your savings, improve your credit score to impress lenders, and practise good money habits in preparation for the repayments you need to make once you’ve successfully applied for a home loan.

It would also be helpful to understand average home loan sizes, as they are an indicator of a changing property market, including house prices, government policies and grants available, housing trends, growth, and potential risks.

Average Home Loan Sizes in Australia

The following data are as of August 2023 based on the Lending Indicator report by the ABS.

While NSW, VIC, and ACT remain the states with the biggest home loan sizes, it is worth noting that the amount of loans in these locations has dropped compared to last year.

Either we’re seeing lower property prices during the period, or home buyers are able to put down a much larger deposit.

On the other hand, the rest of the other states are showing higher home loan sizes. This could be an indication of property growth, meaning home buyers are enthusiastic to buy, and there is enough supply to satiate the market’s demand.

Overall, the average home loan size in Australia as of August 2023 is $585K versus $589K in August 2022.

How much would your mortgage repayments be?

Now that you have an idea of the average home loan size in the state where you plan to buy a house, what does that mean for you and your monthly outgoings?

As mentioned above, it is helpful to understand your potential repayments. Find out if you can afford to make this commitment given your current financial situation because defaulting on your repayments means possibly losing your home as it can be repossessed by the bank.

If you want to learn more about repayments and how to calculate your own home loan repayments, you can use Lendstreet’s repayments calculator here.

Here’s a simple illustration of how much the repayments is going to be for a home buyer who will be purchasing a home in NSW:

Here is another sample illustration of the monthly repayments of a home buyer from QLD:

The numbers above offer an understanding of the financial commitment involved when taking out a home loan in the state where you want to buy. Factor them into your monthly budget and ask yourself if this is a responsibility you can sustain monthly for several years.

Lendstreet: Your Strategic Partner in Finding a Suitable First Home Buyer Loan

Interest rates are a huge factor in determining your repayments. As a first home buyer, you need a strategic mortgage broker by your side to help you find a well-suited home loan for your specific lending needs. Finding the best rates should be your trusted mortgage broker’s top priority, along with recommending home loan features and deals that will benefit you.

If you are planning to buy your first home and want to receive a sample illustration of repayments based on actual and prevailing interest rates from banks and lenders, you can contact us here. Meanwhile, we offer a free 20-minute mortgage consultation service directly provided by our lead mortgage broker. Choose your preferred schedule by visiting this link.

Homeownership is a long, challenging, and expensive road, along which you’ll encounter expenses such as stamp duty, land tax, conveyancing, and insurance, which can accumulate over time into an often overwhelming total sum.

In 2023, the Victorian Government offers schemes and grants designed to ease these financial burdens for first-time homeowners and buyers, such as the First Home Owner Grant (FHOG).

In this article, we’ll explore the benefits and requirements of the First Home Owner Grants available in Victoria for first-time buyers in 2023. Whether you’re wondering about your eligibility for the grant or how to maximise the grant benefits, Lendstreet is here to help.

VIC First Home Owner Benefits in 2023

In 2023, being a first-time homeowner comes with many challenges — but with any challenge comes the rewards. One of the most notable of the 2023 VIC property incentives available to first home buyers is the First Home Owner Grant (FHOG), which is also available in different forms and with varying terms in other states such as NSW and QLD. The Victoria FHOG is designed to provide benefits to first home buyers and assist with the considerable cost of buying or building a new residential property.

Stamp Duty Concession

Typically, if you buy a property, you’ll pay stamp duty (a tax levied on property purchases and documents). But if you buy a property valued at $600,000 or less in Victoria, you won’t have to pay stamp duty at all — thanks to the current stamp duty concessions available to first homeowners.

First Home Guarantee

The Federal Government guarantees up to 15% of your deposit if you are eligible — meaning you may only have to pay a 5% deposit to purchase your first home. While there are limits depending on the value of your property, this can be an extremely useful incentive for first home buyers and drastically reduce the initial cost of homeownership.

First Home Buyers Super Saver Scheme

This VIC property incentive enables you to save money for your superannuation fund more quickly — with contributions before (concessional) or after (non-concessional) tax. The scheme means you can withdraw up to $15,000 from your super fund in any one year.

Homebuyer Fund

The Victorian Homebuyer Fund is a shared equity scheme — in which the state government contributes up to 25% of a property purchase for eligible first home buyers. The fund is applicable if you have a 5% deposit on your new home. It can reduce your overall mortgage and help you avoid paying Lender’s Mortgage Insurance.

These 2023 VIC property incentives are designed to make buying and building property more accessible going forward, not just for those with lots of disposable income.

How to Apply for the First Home Owner Grant

The bank or lender providing your loan will usually lodge your FHOG application for you. However, you’ll have to do your part, too — you’ll need to check and double-check all your finances, documentation, and contracts. Here’s how you can prepare:

• Review your eligibility and ensure you meet the requirements for the grant.
• Prepare documentation proving that your property is new and hasn’t been previously occupied or sold.
• Prepare identification and financial documents to prove your identity, income, and savings (for you as well as anyone else on the application form, such as a partner or spouse).
• Confirm that you have a signed copy of the official contract of sale — or contract to build — for your new property.
• Make plans to live in the new property for 12 months as your Permanent Place of Residence.

Following these steps can help ensure you successfully apply for the First Home Owner Grant.

Maximising First Home Owner Grants in Victoria

Many of the incentives and grants currently available for first homeowners in Victoria are extremely useful — however, they can also often be complex, with rigorous requirements. But with the correct information and professional guidance, the Victorian Government’s incentives can enable you to own your first home and ease your financial burdens.

Remember: applying for the First Home Owner Grant and other VIC first home owner benefits is best accompanied by consulting the help and guidance of a professional mortgage broker who knows the ins and outs of the property market and stays up to date with current grants, incentives, concessions, and trends.

We hope this guide to the Victorian FHOG has helped you along your journey to homeownership. Lendstreet is a team of knowledgeable mortgage brokers in Melbourne and Sydney. We understand how difficult homeownership can be, which is why we use our intricate understanding of the property market in Victoria and Australia to help first homeowners find the best loan terms possible. Whether you’re looking into homeownership grants in NSW or Victoria, we’re here to enable you to make the most informed decisions that will help you on your way to your new home.

With the Australian real estate market taking a hit in 2022 thanks to increasing mortgage rates, buying a house in 2023 is sensible for home buyers looking for affordable options.

While rising interest rates will increase mortgage prices, fewer people will be willing to invest in property, halting the housing market price growth. According to experts, the median house price for Australian property is set to go down by over 10% by the end of the year, making house prices the most affordable they’ve been since pre-pandemic.

This article will explore the most affordable regional and capital city suburbs with a median price below $900,000.

What is the median house price of a Sydney home in 2023?

As of May 2023, the median house price of a Sydney home is currently $1,552,015.

While Sydney is one of the most expensive cities on the planet, that doesn’t mean there aren’t affordable houses in the outer suburbs.

Which Australian city has the lowest median price for homes?

Compared to Sydney, Darwin is the most affordable city to live in, with affordable property in both the city centre and the surrounding suburbs. The median house price in Darwin is $632,071, while units are currently $390,265.

This means that if that property owner decides to sell the house after 10 years (the median holding period), they have paid a total of $26,110 in annual tax, which is way lower than the upfront stamp duty fee. This is equivalent to a savings of $24,640! It will take 19 years for the annual tax to breakeven with the stamp duty cost.

Top 5 most affordable suburbs in 2023

1. Peak Hill, NSW

Peak Hill is a quiet, peaceful town with a relaxed lifestyle and easy access to nature and outdoor activities, located 400km west of Sydney. It may be a good choice for those seeking a rural lifestyle, although it may not be suitable for those who require access to large city amenities and services.

Peak Hill has several outdoor recreational opportunities available to residents, including nearby nature reserves and national parks. Goobang National Park, which is approximately 30 kilometres away, offers scenic walking trails, camping facilities, and picnic areas, making it ideal for couples and families.

As of April 2023, the median house price of a Peak Hill home is currently just $200,000. Peak Hill is also a regional suburb and part of the Regional First Home Buyer Guarantee (RFHBG).

2. Hopetoun, VIC

Hopetoun is located 100km southeast of Mildua and is the cheapest suburb in VIC due to its rural location. Despite this, Hopetoun has various services and amenities, including a supermarket, post office, medical centre, along with several shops and cafes.

For families, Hopetoun has a primary school and college, as well as several parks. Lake Lascelles, located nearby, is a very popular destination in the local community, with fishing, camping, and boating opportunities.

Hopetoun is part of the RFHBG, and the median house price as of April 2023 is just $185,000, making it one of the cheapest suburbs in Australia.

3. Tara, QLD

Tara is a small, friendly town located 300 kilometres from Brisbane and 50 kilometres from Dalby. It offers a relaxed lifestyle with easy access to outdoor activities and scenic attractions.

Tara is known for its agricultural industry and has a range of services and amenities to support its residents, including a supermarket, post office, medical centre, and several shops and cafes. The town also has a primary school, a high school, and several parks and sports facilities, making it perfect for young families.

Tara is also part of the RFHBG, with the median house price currently $150,000.

4. Willmot, NSW

One of the most affordable suburbs in Syndey, Willmot is just 49 kilometres west of the central business district.

Willmot offers close proximity to city living in central Sydney while still having a suburban feel that makes it perfect for young families. Unlike other inner city suburbs, Willmot is home to two primary schools, an abundance of parks, and Mount Druitt – a major shopping centre that will satisfy all your retail needs.

This suburb also has several reserves, including Whalan Reserve and Minchinbury Reserve.

The median house price in Willmot is currently $640,000 for houses, making it one of the cheapest suburbs in close proximity to Sydney.

5. Mount Druitt, NSW

Mount Druitt is a Sydney suburb located 43 kilometres west of the capital. One of the cheapest suburbs in Sydney, Mount Druitt has plenty of amenities, including a shopping centre, library, and post office. It’s also a multicultural hub with plenty of restaurants and cafes.

Despite being one of the cheapest inner city suburbs, Mount Druitt has several parks and recreational areas, including the Swimming Centre and the Nurragingy Reserve, making it popular amongst families and outdoor enthusiasts.

The suburb is well-connected to other parts of Sydney, with several train and bus services running through Mount Druitt Station. The Western Sydney University also has a campus located in the suburb.

The median house price of a Mount Druitt home is currently $885,000.

Ready to find your dream first home? Consider Lendstreet.

Our expert mortgage brokers are ready to advise you on the best suburbs for your first home. We can help you secure a home loan that best suits your needs, and we’ll guide you through the ever-changing property market. Book a free consultation with our the best home loan brokers in Sydney.

FAQs

Why are property prices coming down in Australia?

Due to the rising cash rate set by the RBA, interest is rising, meaning banks charge more interest on property mortgages. Because of this, fewer people are willing to invest in real estate, meaning there’s less demand for property. This is reflected in median house prices around Australia.

How much do you need to earn to buy a house in Australia?

The amount you need to earn to buy a house in Australia depends on several factors, such as the property’s location, size, condition, and financial situation, including your income and savings.

How much house can I afford based on my salary?

The past year has seen mortgage repayments increase significantly, so it’s necessary to determine how much you’ll need to repay per month and whether this is affordable on your current salary.

For instance, if your mortgage interest rate is 5% and your mortgage is worth $650,000 after putting down a cash deposit of $160,000, with a loan term of 25 years, your monthly repayments would be $3,810 per month.

You can also use our repayments calculator here.

Buying your first home is an exciting time and a significant milestone in your life. However, navigating the purchasing process can be daunting and expensive, particularly in the competitive New South Wales market. Between stamp duty, inspections, conveyancing, and insurance – the costs begin to add up.

Thankfully, the NSW Government offer multiple financial incentives and support for aspiring homeowners in the state. Through the NSW First Home Buyer’s Grant and Assistance Schemes, the Government are helping to make homeownership more liable, accessible, and affordable to the masses.

This article will clearly outline the first home buyer benefits, assistance schemes, and property incentives available in New South Wales in 2023. We will also help you determine your eligibility for each incentive and teach you how to maximise your grant benefits when purchasing your first home in NSW.

NSW First Home Buyer Benefits

The New South Wales Government offers several concessions, exemptions, and grants to help ease the financial burden for prospective homeowners entering the property market. These financial benefits are designed to help throughout the home buying process, and each scheme has a different purpose.

If you are a resident of NSW, hoping to finally purchase the home of your dreams, and break into the property market, here is a breakdown of the five best first home buyers’ benefits you can avail of.

1. First Home owner’s Grant 2023

The First Home Owner’s Grant (FHOG) is a $10,000 subsidy available to first-time buyers in NSW building or purchasing a brand new home. This grant is only available to newly built homes, properties in construction, or substantially renovated homes. It is not available for established homes or anyone looking to buy a second property.

Am I Eligible?

To take advantage of the First Home Owner’s Grant, it doesn’t matter if it’s a house, townhouse, apartment, unit, or a new-build under construction that you’re buying. However, you do need to meet the below criteria:

• You can only apply as a person or a couple, not as a company or trust.
• You must be at least 18 years old.
• At least one person applying must be an Australian citizen.
• You have not previously owned a home or any residential property in Australia.
• You have yet to receive a First Home Owner Grant in Australia.
• You must live in your first home as your principal residence within 12 months.
• You must live within the property for a minimum of 6 months.
• The purchasing price of your new home cannot exceed $600,000.
• If you’ve bought land to build a home, the total combined costs of the land and the house itself must not exceed $750,000.

2. Transfer of Duty and First Home Buyer Assistance Scheme (FHBAS) in 2023

As a first-time buyer in NSW, you might be entitled to an exception from paying transfer duty or at least a concessional rate under the First Home Buyer Assistance Scheme (FHBAS). The NSW Government set up this scheme to reduce the financial burden for citizens hoping to finally get on the property market and buy their first home.

Unlike the First Home Owner Grant, which is only available for brand new homes, the FHBAS applies to:

1. Buying an existing or established home
2. Buying a brand-new home
3. Purchasing vacant land that you intend to build a house on

Stamp Duty Exemptions and Concessions

If you are an eligible first-time buyer in New South Wales, you may be exempt from paying any stamp duty on properties valued up to a certain threshold. If your property is valued above this threshold, you will receive concessions.

These thresholds differ depending on if your house is a new home, an existing home, or it is vacant land and are broken down as follows:

3. The First Home Guarantee (FHBG)

The First Home Guarantee (FHBG) is a subsection of the Australian Government’s Home Guarantee Scheme (HGS), created to help first-time buyers and make purchasing a home easier. Simply put, the FHBG provides first-time buyers with more purchasing power and financial security.

What is the First Home Guarantee?

Under the FHBG, eligible prospective buyers in NSW can purchase a home with as little as a 5% deposit. As part of this process, successful applicants will receive a home loan from a Participating Lender guaranteed by the National Housing Finance and Investment Corporation (NHFIC) and will not need to pay Lender’s Mortgage Insurance. This significantly reduces costs while providing extra financial security for first-time buyers.

It is important to note that the Guarantee is not a cash payment you receive or a deposit for a home loan. Instead, it gives you greater purchasing power and means you do not need to save as much for your deposit.

Am I Eligible?

The First Home Guarantee (FHBG) was created to help first-time home buyers in Australia who require financial support and security overcome the barriers and challenges that come with this process. As a prospective buyer in NSW hoping to benefit from this scheme, you must ensure to meet the following criteria:

• You are applying as an individual or couple and not a company or trust
• You are an Australian citizen
• You are at least 18 years old
• As an individual, you are earning less than $125,000
• As a couple, your combined earnings are less than $200,000
• You will be the owner-occupier of the home, with no intention to rent it out
• You have not previously owned a property in Australia or received the FHBG grant

With the First Home Guarantee in NSW, there is a price cap on properties of $900,000 in Sydney and other regional centres such as Newcastle, Geelong, Illawarra, Lake Macquarie, Gold Coast, and Sunshine Coast. In the rest of the state, there is a price cap of $750,000, so you must ensure the home you are buying does not exceed this in value.

4. Shared equity Home Buyer Helper 2023

The Shared Equity Home Buyer Helper is another NSW Government initiative designed to help eligible residents within the state purchase a home without needing a massive deposit.

What is the Shared Equity Home Buyer Helper, and How does it work?

This scheme is targeted towards single parents, older singles, and critical worker first home buyers, and it helps eligible buyers to purchase a new or existing home with as little as a 2% deposit. To achieve this, the NSW Government contribute a proportion of the purchasing price and, in return, will receive equivalent interest in the property.

The contribution the Government make is a percentage of the purchasing price, and the maximum amount they contribute is determined by whether it is an existing home or a new home that you are purchasing.

• For an existing home, the maximum contribution is 30% of the property value
• For a new home, the maximum contribution is 40% of the property value

This scheme is relatively flexible for participants. As long as you remain eligible, you are not required to make any repayments and will not be charged interest or rent. Furthermore, the NSW Government allows you to make voluntary payments, meaning you increase your ownership of the property.

Am I Eligible?

This initiative is focused on helping NSW residents that require financial support due to their occupation or family status. The scheme is open to:

1. Single parents of a dependent child or children
2. Single people who are 50 years of age or older
3. First home buyer key workers, including paramedics, nurses, midwives, police officers, teachers, and early childhood educators

If you find yourself within one of these demographics, you also need to meet the below criteria to receive assistance:

• You are 18 years old
• You are an Australian or New Zealand citizen, or a permanent resident of Australia
• You do not currently own a home or any land
• You will occupy the home as your principal place of resident
• You have a minimum deposit of 2% of the purchase price
• As an individual, your gross income is no more than $90,000
• As a couple, your combined income does not exceed $120,000
• You would not be able to service the mortgage or purchase the property without this Government contribution

If you want to buy in Sydney or any major regional centres (Illawarra, Newcastle, Lake Macquarie, Central Coast, and North Coast of NSW), the property’s value cannot exceed $900,000. If you hope to buy in other areas within the state, the home cannot cost more than $600,000.

Maximising First Home Buyer Benefits in NSW

If you are an aspiring homeowner struggling to navigate the complexities of buying your first home, we hope this guide helps. As one of Sydney’s leading mortgage brokers with a deep understanding of the property market, we understand the stresses and difficulties of purchasing your first home. With this guide, we wanted to highlight that multiple NSW property incentives and grants are available to make buying a home easier for you.

With multiple first home buyer grants available in NSW, we recommend researching the benefits of each scheme and figuring out if you are eligible before you apply. By understanding the financial assistance available, you can remove a lot of the financial burden of buying your first home and focus on landing the house of your dreams.

If you still need help navigating the application process or require the advice of a professional mortgage broker, reach out to our experts at Lendstreet. We can provide everything you need to make the right decision and purchase the home you deserve.

With rising interest rates and ongoing costs after the initial property purchase, many Australians struggle to buy their first home. Luckily, the Australian Government’s Regional First Home Buyer Scheme (RFHBG) is designed to help those struggling to step on the property ladder with the chance to pay a lower deposit without having to pay Lenders Mortgage Insurance.

There are plenty of eligible suburbs as part of the RFHBG, perfect for first home buyers. In this article, we’ll explore the top three suburbs you should check when starting your property search.

What is the Regional First Home Buyer Guarantee (RFHBG)?

The Regional First Home Buyer Guarantee (RFHBG) is an initiative the Australian Government provides, supporting eligible first-home buyers to purchase their new property sooner by allowing them to pay a lower home loan deposit.

From 1 October 2022 – 30 June 2023, RFHBG places are available to 10,000 eligible regional first home buyers, with the home loan guaranteed by NHFIC.

The scheme helps eligible first home buyers to pay a smaller deposit (as little as 5%) without having to pay Lenders Mortgage Insurance. This reduces the financial strain many feel during the buying process and helps them better afford the ongoing costs involved with purchasing a property. It lessens the burden of rising interest rates, home and contents insurance, and council rates.

Any home loan guarantee is for up to a maximum amount of 15% of the property’s value and is not a cash payment or a home loan deposit.

What should first home buyers look for when choosing a regional suburb?

First home buyers looking to buy a slice of Australia’s property market must consider their individual needs and desires when starting their property search. For instance, choosing a bustling suburb with plenty of vibrant nightlife might be a perfect fit for one couple but could end up another couple’s worst nightmare!

When researching suburbs, consider the following:

1. Affordability

When researching regional suburbs, choosing a location with a more affordable purchase price should be a significant consideration.

2. Public Transport

When searching the property market, consider the suburb’s accessibility to central hubs, specifically a train or bus link. That way, you’ll find it much easier to reach all areas of the city.

3. Crime Rates

You need to feel safe in your new home, so researching local crime rates should be part of your search for the right property.

4. Amenities

There are a lot of regional areas suitable for plenty of different lifestyles. Consider whether you enjoy one similar to the city vibe or prefer a more relaxed setting with plenty of green spaces.

5. Eligibility for RFHGB

During the research stage, ensure your desired suburb is listed on the RFHBG financial assistance program to help you buy your dream first home for less. You can check each suburb’s eligibility through the RFHBG website.

The top 3 regional suburbs for first time buyers

Plenty of regional suburbs on the RFHBG scheme feature homes with reasonable purchase prices.

Whether you enjoy a busy location or a relaxed vibe, here are the top three regional suburbs ideally suited to those starting their homeownership journey.

1. Coffs Harbour, NSW

With sprawling beaches and abundant attractions, including the Solitary Islands Marine Park, Coffs Harbour is a lovely suburb in New South Wales.

Coffs Harbour combines tranquil beach locations with bustling city life, including an emerging food scene, botanical gardens, and its famous Big Banana Fun Park.

For first home buyers, real estate in Coffs Harbour is generally affordable compared to other Australian cities, with a median house price of $810,000 and a median unit price of $519,000 as of March 2023. The city is also expected to grow over the next few years, with the NSW government funding improvements to the marina.

Coffs Harbour is an eligible suburb for the RFHBG, meaning first home buyers can receive financial help during the home-buying process. Coffs Harbour will likely be home to investment property in the coming years, so now is an excellent time to buy.

2. Elizabeth Downs, SA

Elizabeth Downs, located in South Australia, is a smaller suburb near Craigmore and Davoren Park. This suburb prides itself on its multiculturalism and is the perfect place to bring up young children, with over 19 parks to play in and easy access to the Gorge Wildlife Park, the River Torrens, and Greater Adelaide.

Plenty of new developments are taking place in Elizabeth Downs, making it a growing suburb with significant potential. With many families moving into the area, the suburb is seeing a growth in family-friendly events catered to young children.

Elizabeth Downs is an eligible suburb on the RFHBG, with average house prices starting at just $334,000 for houses. If you’re unsure about whether Elizabeth Downs is right for you, contact a local buyers or real estate agent who understands the Adelaide property market.

3. Wagga Wagga, NSW

Wagga Wagga, located in NSW, is the largest inland city with plenty to do, including the Wagga Wagga Art Gallery, the Wagga Beach, and the Victory Memorial Gardens. The city is also just a three hours drive from Canberra, so residents are still close to the action.

Many new residents are attracted to Wagga Wagga due to its recent renewable energy and defence projects, and house prices will grow by over 20% in 2022.

First home buyers can receive help when looking at a property purchase in Wagga Wagga, with it being eligible on the RFHBG. Property prices average at $669,500 for houses and $405,000 for units, making it still affordable for those looking to join the Australian property ladder.

Are you a first home buyer? Consult with Lendstreet today.

Our trusted local mortgage brokers are ready to advise you on the best suburbs eligible for the RFHBG. We can help you secure a home loan that best suits your needs and desires. Contact Lendstreet and find your dream first home today.

You can also book a free consultation here or email us at support@lendstreet.com.au.

FAQs

What other suburbs are included in the Regional First Home Buyer Guarantee?

Yes, there are other regional suburbs and areas included in the RFHBG. You may check the suburb where you want to buy in here.

Do I need be paying the Lenders Mortgage Insurance when buying first property?

You may need mortgage insurance when buying your first property if the size of your down payment is less than 20% of the purchase price. Your home loan lender may require you to obtain mortgage insurance to protect them if you default. Under the RFHBG scheme, you won’t need to pay Lenders Mortgage Insurance, if you’re eligible.

Also, you may contact a trusted mortgage broker to get the best advice if you have prepared less than 20% deposit.

Are there other financial assistance available for first home buyers in Australia?

There are several government incentives available to first home buyers in Australia. You can check the National Housing Finance and Investment Corporation’s (NHFIC) website to learn more about the following grants and schemes for first home buyers:

• First Home Guarantee (FHBG)
• Regional First Home Buyer Guarantee (RFHBG)
• Family Home Guarantee (FHG)

There are also other first home buyer incentives that are being offered per state, and you may check them here.

If you’re a first home buyer looking to buy a property in Melbourne, congratulations! Melbourne is one of the most beautiful cities in Australia, with attractions such as the National Gallery, Royal Botanical Gardens, and the Melbourne Sky Deck.

However, it’s no secret that Melbourne is a very expensive place to buy. It’s Australia’s second most expensive city, and average house prices currently sit at $1,032,903.

Some suburbs close to Melbourne central are affordable for first home buyers. Plus, with the First Home Buyer Grant and the exemption from paying stamp duty, home buyers entering the market now have a better chance than ever at succeeding.

While Melbourne’s house prices boomed in 2021, growing by 17.2% since 2020, houses are currently declining in value – good news for prospective home buyers!

Since December 2022, the Melbourne property market has declined by -9.6 %, with further price drops expected into 2023. As of December 2022, the median house price in Melbourne is $1,032,903, while the average unit price is $561,463.

If you’re a first home buyer looking to purchase a residential property in Melbourne, you could be eligible for a First Home Owner Grant. You could receive $10,000 towards your new home from the Victorian Government.

First home buyers purchasing a house or unit may also be exempt from paying stamp duty on their new residential property as long as it’s worth less than $600,000.

Who is eligible for the First Home Owner Grant?

First home buyers could be eligible for the First Home Owner Grant – a lump sum of cash that goes towards the cost of buying a first home. There’s no need to repay this grant, which isn’t taxable, making it a no-brainer for those looking to buy their first dream home.

The state government funds the grant, so how much you’re eligible for depends on where you buy a house. Check here to find out how much you could receive. You can receive up to $10,000 in a tax-free lump sum in Melbourne.

You may be eligible for first-home buyer grants. To qualify, you must:

• Be a permanent resident or an Australian citizen. If you’re co-buying, at least one of you must be a permanent resident.
• Be a first home buyer, and you can’t have taken out a home buyer loan in the past.
• Buy your principal place of residence – not an investment property
• Live in the property for at least six months after purchase.
• Be aged over 18.

Top 3 first home buyer hotspots in Melbourne

Ready to become a Melbourne home buyer? Here are the top five places that are suitable for first-time buyers looking to step onto the property ladder.

1. Moonee Ponds

Moonee Ponds is located in the inner north-western area of Melbourne, close to popular suburbs such as Brunswick, Essendon and Ascot Vale.

With a bustling commercial heart, including the famous Puckle Street, Monee Ponds is characterised by bright colours, ornate buildings, and various shops, cafes, and restaurants, making it perfect for first-time buyers looking for a vibrant and up-and-coming suburb.

North of Moonee Ponds is its Central Shopping Centre, offering everything you could ever need in one easy-to-access place.

If you don’t fancy shopping, you can also explore the suburb’s many historic mansions and parks, including the stunning Queens Park.

Melbourne is easily accessible by bus or train, both running regularly. Getting to Melbourne centre from Moonee Ponds will take just 15 minutes.

Home buyers looking for a property in Moonee Ponds can expect to pay an average of $1,465,500* for homes. At the same time, a unit is much more affordable at $576,000*.

2. Broadmeadows

Broadmeadows is an up-and-coming suburb 15 kilometres from Melbourne’s Central Business District. It’s one of the most affordable suburbs in Melbourne. With excellent transport links to and from the city, it attracts many first-time buyers looking to step onto the property ladder. It is a diverse neighbourhood, with only 33% of Broadmeadows locals speaking English.

Broadmeadows is the perfect place to start a family with local libraries, busy playgrounds, a national reserve for bracing hikes, and plenty of other local attractions to explore. It’s also just a five-minute drive from the Jack Roper Reserve, one of Hume’s most popular parks. With a large playground, barbecue facilities, cycle paths, and a bustling soccer path, the Jack Roper Reserve is a haven for outdoor enthusiasts.

The average price for a home in Broadmeadows is $595,00** for houses and $447,000** for units, making it the most affordable place to live in Melbourne’s north.

3. Caroline Springs

Caroline Springs is an emerging suburb located in the Outer West of Melbourne. Once characterised by its heavy industry, the suburb is now gentrifying, with excellent train links to the city. Located just 30 minutes from Melbourne city centre, Caroline Springs is perfect for families looking for wide open spaces, greenery, parks, and reserves.

Families living in Caroline Springs also have access to high-quality schools in the area and plenty of childcare centres. Even better, this suburb is a planned community, meaning there is a range of cafes, outlets, and businesses on your doorstep.

House prices average at $745,500** for houses in Caroline Springs and $455,000** for units.

Are you a first home buyer in Melbourne?
Consult with Lendstreet today.

We are your trusted local mortgage broker, ready to advise you on the best suburbs you can explore for your first home. We can help you secure a home loan that best suits your situation. Contact Lendstreet and start your home buying journey today. You can also book a free consultation here or email us at support@lendstreet.com.au.

Do first home buyers in Melbourne pay stamp duty?

Stamp duty is a fee you pay when buying a home. Luckily in Melbourne, there are some exemptions and concessions available for first home buyers. You may check them here.

How do I get a First Home Owner Grant?

To get a First Home Owner Grant, check if you are eligible by visiting the official website of the State Revenue Office here.

What is the state revenue office?

The state revenue office is a tax collection agency run by the Victorian Government.

What is the house and land package?

House and Land packages are when you purchase land from a developer and select a builder to design your home. These are often sold as a bundle.

How do I secure a home loan?

Securing a home loan typically involves the following steps:

1. Determine your borrowing capacity: Before you start looking for a home loan, you should first determine your borrowing capacity by assessing your income, expenses, and other financial commitments. You can use online calculators or speak to a mortgage broker to get an idea of how much you can borrow.

2. Choose a suitable loan: There are many different types of home loans available in Australia, so it’s important to choose one that suits your needs and budget. Some common types of home loans include variable rate loans, fixed rate loans, and split loans.

3. Gather required documentation: When you apply for a home loan, you’ll need to provide certain documentation, such as proof of income, identification documents, and information about any other assets or debts you may have.

4. Apply for the loan: You can apply for a home loan through a bank, credit union, or mortgage broker. When you apply, you’ll need to provide your personal and financial information and the details of the property you’re purchasing.

5. Wait for approval: The lender will assess your application and determine your eligibility for the loan. Depending on the lender, this process can take several days to several weeks.

6. Get a valuation: Once you’ve been approved for the loan, the lender will usually require a property valuation to determine the property’s value.

7. Sign the loan agreement: If the property valuation is satisfactory, you’ll be sent the loan agreement to sign.

8. Settle the loan: The final step is to settle the loan, which involves transferring the loan amount to the seller and registering the property in your name.

It’s important to note that securing a home loan can be a complex process. It’s a good idea to seek the advice of a professional, such as a trusted mortgage broker or financial adviser, to help you navigate the process.

Sources:
*Domain December 2022 House Price Report. and **realestate.com.au March 2022 – February 2023 Suburbs Reports.

What is the First Home Buyer Choice?

The First Home Buyer Choice Scheme is a program that provides first-home buyers with the choice to pay a one-off upfront stamp duty tax or to pay an annual property tax.

Stamp duty means significant upfront costs for aspiring homeowners. With the option to pay land tax each year, first-time home buyers can spread their expenses rather than cough up a large sum in one go.

With only 67% of New South Wales households owning their home (down from 70% in the 1990s), the government wants to remove barriers preventing first-home buyers from entering the property market. If first-home buyers opt into the First Home Buyer Choice Scheme, they will make annual property tax payments of $400 plus 0.3% of the unimproved land value of the property.

The First Home Buyer Choice Scheme is available to property investors too. Buying an investment property will cost $1,500 plus 1.1% of the unimproved land value of the property.

Houses are not locked into the scheme if the owner sells their home. If you purchase a home from another buyer who opted into the scheme, you are not required to opt into the property home choice scheme.

How much does stamp duty cost?

Stamp duty is a hefty sum for first-home buyers. The specific amount you pay depends on the value of the property. First home buyers are eligible for a full stamp duty exemption for homes up to $650,000. However, with the average property value in Sydney topping $1 million, many first-home buyers face expensive stamp duty fees.

Here are the latest requirements for stamp duty in NSW:

1. A property valued between $0 to $15,000 costs $1.25 for every $100 (minimum $10)
2. A property valued between $15,000 to $32,000 costs $187 plus $1.50 for every $100 over $15,00
3. A property valued between $32,000 to $87,000 costs $442 plus $1.75 for every $100 over $32,000
4. A property valued between $87,000 to $327,000 costs $1,405 plus $3.50 for every $100 over $87,000
5. A property valued between $327,000 to $1,089,000 costs $9,805 plus $4.50 for every $100 over $327,000
6. A property valued over $1,089,000 costs $44,095 plus $5.50 for every $100 over $1,089,000

How much money could you save?

If you have a property worth $800,000 with a land value of $240,000, you would have to pay a stamp duty of $31,415. However, if you are eligible to opt into the property tax, you would pay $400 plus 0.3% of the unimproved land value.

The calculation looks like this:

400 + (0.003 x 240,000) = $1,120

Over 30 years (the average lifetime for your home loan repayments), you would pay an average property tax payment of $33,600. While it’s marginally more costly than if you were to pay stamp duty upfront, you won’t pay the property tax in one go. There will be property tax rates. The scheme could help you get onto the property ladder sooner.

Who are the eligible first home buyers?

Only first-home buyers may apply to the scheme. Eligible first-home buyers for First Home Buyer Choice must meet the following requirements, including being over 18, an Australian citizen or a permanent resident:

1. You must be a person (not a company or trust) at least 18 years old to be an eligible first home buyer
2. You, or at least one person applying, must be an Australian Citizen or permanent resident
3. You must not have owned or co-owned residential property in Australia previously to be an eligible first home buyer
4. You must not have previously received a First Home Buyer Grant or other duty concessions
5. The property purchase price must be less than or equal to $1.5 million
6. You must move in within a year and live in it continuously for at least six months
7. You must sign the contract of purchase after the scheme commencement date

When will the scheme commence?

The scheme commencement date is the 16th of January, 2023. However, the legislation was passed on the 10th of November 2022, allowing those purchasing a house from 12 November 2022 to 15 January 2023 to opt for the annual property tax. They will still be asked for paying stamp duty, but they can apply for a refund.

What other First Home Buyer Schemes are there?

First-home buyers can also access help through a range of other schemes and support programs, such as:

1. A co-owned residential property program
2. First Home Buyer Grant
3. Regional Home Ownership Guarantee
4. First Home Buyer Assistance Scheme

It’s worth bearing in mind that you cannot use multiple first-time buyer schemes.

First Home Buyer Choice

While many existing stamp duty concessions are available, first-home buyers purchasing properties in Sydney may struggle with high property prices and other rising costs, such as property tax. If you’re ready to buy your first home, speak to the trusted Sydney home loan brokers to secure a competitive deal.

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FAQs

Do you pay stamp duty as a first home buyer in 2022?

First-home buyers must plan with paying stamp duty on properties worth $800,000 or more. However, existing stamp duty exemptions are available for properties worth under $800,000. A home valued at $650,000 or less has a complete exemption, while properties between $650,001 and $850,000 are discounted.

What benefits do first home buyers get in Australia?

First-home buyers purchasing can now pay smaller annual property tax rather than making a one-off stamp duty payment. Moreover, many first-time buyer grants or duty concessions, including the First Home Buyer Grant, are available.

In what the NSW government claims to be a historic legislation, a new law was passed in Parliament yesterday, 10 November 2022. This new law will enable first home buyers to choose between paying a smaller property fee or a large upfront stamp duty on their first purchase.

As it currently stands, in NSW, when someone buys a home, they are required by the government to pay tax (stamp duty) for the transfer of ownership of a property from one person to another.

Stamp duty is calculated based on the purchase price. It works on a regular up-and-down scale, meaning that the more expensive the property is, the more the stamp duty charge will be. Know more about stamp duty in NSW or calculate your stamp duty here.

The NSW government recognises that stamp duty is a significant barrier for many first home buyers to enter the property market. Hence, the First Home Buyer Choice was made into law and is applicable for properties under $1.5 million. It applies to any Australian citizen or permanent resident. First home buyers will have the choice to pay an annual levy of $400 plus a 0.3% property tax on the value of their land.

Other features of the NSW First Home Buyer Choice:

1. For the purchase of vacant land intended for the construction of a first home, the price cap will be up to $800,000.
2. Property tax rates will be indexed so that the average annual property tax payment grows at the same rate as gross state product (GSP) per capita. However, annual property tax increases will be capped at 4% to avoid bill shock.
3. This program is uncapped and will be available for eligible first home buyers who want to access it.

Annual Property Tax and Stamp Duty Cost Comparison

Here is a sample computation to illustrate the advantage of opting to pay the annual tax fee versus paying the traditional stamp duty in NSW.

For a Sydney property purchased at $1,210,000, a first home buyer will need to pay $2,611 annually versus $50,750 upfront.

It’s important to note that the property tax is based on the land value, whereas stamp duty is based on the total purchase price of the property.

This means that if that property owner decides to sell the house after 10 years (the median holding period), they have paid a total of $26,110 in annual property tax, which is way lower than the upfront stamp duty fee. This is equivalent to a savings of $24,640! It will take 19 years for the annual tax to breakeven with the stamp duty cost.

When Can First Home Buyers Start Accessing This Scheme

The NSW First Home Buyer Choice annual tax option will be fully operational on 16 January 2023.

However, starting tomorrow, first home buyer choice, is available to everybody who will purchase between Saturday and 15 January will be able to access the scheme. Eligible first home buyers will still be required to pay stamp duty but may apply for a refund.

If you are a first home buyer looking to buy a property in Sydney, the First Home Buyer Choice is your chance to significantly reduce upfront costs involved in buying a property as well as the time you need to save for deposit. You still have the option to pay stamp duty if you prefer, but the annual property tax option is seen as a better and more convenient alternative.

It also appears likely that this scheme may be used in conjunction with the First Home Guarantee. This enables eligible first home buyers to purchase a home with as little as 5% deposit without paying Lenders Mortgage Insurance (LMI), which in combination forms a great incentive for potential first home buyers. This will be confirmed as more information about the First Home Buyer Choice scheme is released.

Expert Help and Advice for First Home Buyers

Work with a trusted mortgage broker near you to secure your first home and help you navigate the NSW First Home Buyer Choice scheme and other government grants you can access. If you want to learn more about buying your first property, we’ve got helpful articles for first-time home buyers like you. Just click this link.

Finally, when you’re ready, you can book a free no-obligation consultation with our senior mortgage broker here.

The annual tax property tax option is an excellent boost for first home buyers to finally make the move towards purchasing their first home. This is indeed a historic law that will benefit thousands of aspiring property owners in NSW. For more questions regarding this program, contact Lendstreet Mortgage Brokers.

Sources:
NSW Government Media Releases and The Sydney Morning Herald.