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.

Episode Transcript

Speaker 1 (00:01):
Good evening, guys.
We're talking about thechanging demographic in
first-home buyers this evening.
Stay tuned.
Some of these facts will shockyou, but this will hopefully
prepare you if you're about tostep first foot into the
first-home buyer journey.

Speaker 2 (00:30):
Thank you, I'm the ringleader, so let's hit it,
alrighty hilarious.

Speaker 1 (00:39):
How are you.

Speaker 2 (00:39):
Bids.
Very good, very good.
How are you doing today?

Speaker 1 (00:42):
Yeah, good.
Good, we kind of spoke aboutthis this morning actually, um
some changing demographics, withparents helping kids get into
property, but we're gonna spendthe next few minutes talking
about first home buyers, thechanging landscape and
demographic with um 2025 verymuch, very much, let's, let's

(01:04):
hit it off.
It's a new reality, that's forsure.
Like the, you know the steppingstones to getting into your
first property is nearimpossible without taking
advantage of governmentincentives and grants,
assistance schemes on the table.
But I think it might be helpfulfor people just to you know,
understand from an agent'sperspective, what's normal and

(01:27):
what's not normal these days.
Um, so people don't feel likethey're on their own yeah, very
much.

Speaker 2 (01:32):
I think, uh, sometimes you need to let them
know as well, uh, because theyare used to getting this one
thing, like you know, almostlike having like this, so like
they don't out there and whatother other possibilities, and I
think it's a good to lay it outthere yeah, absolutely.

Speaker 1 (01:49):
I mean, first of all, uh like, comparing to a decade
ago, the statistics tell us thatfirst, home buyers are getting
older in sydney, yeah, so we'redealing 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 andwith that people are not

(02:12):
necessarily just going for anentry-level property.
People are holding out longerand saving more to try and buy a
forever home or a home that'sgoing to last them longer than
just an initial starting pointin the market.

Speaker 2 (02:28):
Yeah, that is very interesting.
So the first one by the age isincreasing.

Speaker 1 (02:33):
The age is increasing , that's you know.
Yeah, that's for certain.

Speaker 2 (02:39):
Do you think that's because of the living costs
that's rising up or the interestrate that are uncertain?

Speaker 1 (02:47):
well, it's funny like the.
The point two on the list isthe time to save for a deposit.
Um, it it was.
It was, uh, three to four yearsold as an average, but now it's
six to ten years old.
Um, to save a 20 deposit insydney and you look at the
median house price and there'sno wonder why.
But that's where the assistanceschemes come in.

(03:07):
They're trying to sort of shaveyears off that and try and get
people into the market quicker.
But yeah, I would say cost ofliving has impacted.

Speaker 2 (03:14):
Highly, yeah, but it's good Like without the
government schemes.
I think there are lots ofthings that normally people take
lightly.
Yeah, you know things like this, the deposits, and you know the
lmis and lots of the otherthings that the government
provide, and the thing is theyonly make it better every year.
I think it's easier to buy yourfirst home, uh, with their lots

(03:36):
of things, uh.
So, yeah, I'll let you kick offwith a few things.
What, what do you think?

Speaker 1 (03:41):
um, another.
Another thing that shocked me,and we spoke about it this
morning, is the bank of mom anddad.
They're now the ninth biggestlender when it comes to
guarantees, small loans and likegifts.
In Australia it's like thebanks of mom and dad are helping
60 to 70% of first home buyers,so six or seven out of 10,

(04:05):
there's some kind of parentassistance of first home buyers
of six or seven out of ten.

Speaker 2 (04:08):
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 theirfirst term, their mom and dad
are all just very good uh yeah,old one there a property for 950
in dy, very close walkingdistance to the beach, and my
mom and dad pretty much did allthe heavy lifting yeah, like I

(04:29):
think, normalize that processyeah, I think it'll definitely
help.
Like I know, there's a big trend, like you know, to kick, kick
the bird out of the nest veryquickly.
But I think these people areslowing down the kicking out
process a little and even ifthey do, like people that
normally downsize very quickly,uh, they're keeping their homes.

(04:50):
They're saying, oh, the kidsmight return.
Yeah, there is a bit of changegoing around another.

Speaker 1 (04:58):
Another thing in addition to that is um, kids, uh
, or you should say first homebuyers, and not just kids.
First-home buyers are gettinginto the marketplace and not
necessarily moving in, so theyare rent vesting for the first
12 months or moving in initiallyand then renting it out after,

(05:19):
to claim the benefits of havingmoved into the property, then
have the next six years capitalgains free, but then switching
it back to an investmentproperty.
So they've got a you knowstable income, generating some
cash flow, living with theparents for a little while
longer and not having theextreme you know the extreme

(05:42):
reality of moving in straightaway and then having to pay
mortgage outgoings and livingexpenses.

Speaker 2 (05:48):
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 madeit easier as well.
Like you know, there's lots ofthings people can work around
with numbers, like I mentioned,reinvesting, for example.
That was not very normal.
Like you know, people think asa first-time buyer, once you buy

(06:11):
it, it's my home, you have tomove in straight away, which not
many people are aware that youknow you can move in anytime
between the first 12 months orthe first 11 months.
So which I'm seeing these daysthat people they let it rent out
still stay with their mom anddad and once the kind of
deadline happens, then theyslowly move in yeah, yeah, yeah,

(06:32):
I'm finding buyers asking somereally good questions and
they're speaking to theiraccountants um, you know,
they're talking aboutdepreciation if it's a newer
building.

Speaker 1 (06:42):
Um, they're talking about the capital growth and,
like the tax benefits, um, ifthey're to.
You know a in a particular kindof way.
So you, you're only a firsthome buyer, um, you, you know
once, and then you've got a 10year period where you can't be.
You know, having lived in anAustralian property, um of your
own, so it does reset, butyou're gonna wait 10 years for

(07:03):
that benefit.
So, people, are you lot of duediligence and time up front
getting in the right place?

Speaker 2 (07:10):
Definitely so.
Does that mean that if someonehas bought a property, let's say
in the 80s, and they've livedthere forever and they're
looking to downsize into anapartment, they could be
qualifying for a first-homebuyer?

Speaker 1 (07:22):
No.
However, if they've purchasedin the 80s, sold that rented
since uh, since the 80s 20, 30years, they may be eligible to
get back in under a new firsthome buy grant.
So if they've not owned aresidential property for more
than 10 years, or they'vethey've owned one in the past
then rented um the remaining oftheir years, they may be

(07:43):
eligible.
So really good to speak with amortgage broker if you're unsure
, and there's only a set numberof you know assistance scheme
places each year, depending onwhat grant or assistance scheme
you're going for.
So that's the best thing youcan do.

Speaker 2 (07:58):
That's great.
That's great, great info.
Lots of things that you have tobe careful and the buyers you
have to be careful.
And now, with two interest ratecuts this year, we can see
ourselves.
There's a lot of confidence inthe market rumble going around,

(08:23):
like you know.
The open home numbers arebigger.
The auctioneers are saying theyare more, uh, registered
bidders and all those things andI can like.
Personally, I'm seeing moreinvestors out there, uh, custom
buyers.
So I think the message is foranyone looking to buy the first
um, buy it now, buy very quicklyyeah, well, for for every one
percent change in the cash rateit reflects a 10 difference in

(08:47):
borrowing capacity.

Speaker 1 (08:48):
so if we get another uh 0.25 rate cut, um, you know
we're on track to.
You know, having a one percentchange in a in a positive
direction, um, since you knowthe beginning of the year, you
can have at least 10% moreborrowing, and I think that's
why you're finding investorsstepping back into the
marketplace and you're findingfirst-time buyers who are

(09:09):
previously priced out butwaiting 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 thatadds a surplus of buyers and on
a market like the NorthernBeaches, where it's supply and
demand that's a big part ofprices and competition.

Speaker 2 (09:32):
Yeah, and it's very, very true.
I was looking literally twodays ago to see okay, if I'm a
first-time buyer and I'm lookingfor a two bedroom unit under
850.

Speaker 1 (09:43):
Yeah, One, wow, wow.

Speaker 2 (09:47):
That that blew my mind, Like if I had 850, we,
like the reason I did 850 was Ijust took like average income of
a person.
I, like you know, put it throughsome calculators and said, okay
, 850 is comfortable and then,looking at the unit because you
know I might be looking to starta family and there was one in
DY, basically, which is the bestto enter in the market in

(10:11):
Northern Beaches, so that kindof caught me by surprise.
So I think there either has tobe change in tactics or a few
things that I think definitelyare changing for store buyers.

Speaker 1 (10:24):
Yeah, it's got to be done as a stepping stone
approach though, becauseSydney'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 takeadvantage of any assistance
games and you can get a 20%deposit, together that's 320
grand.
I don't know anyone that'swalking around with that kind of

(10:45):
money in the bank for theirfirst property, unless, of
course, they've won the lottery,um or uh, you know, again got a
loan from them, from the bankof mom and dad definitely.

Speaker 2 (10:55):
I think mom and dad bank's probably the best and the
interest rate is not very, verylovely yeah that's, but that is
the reality.

Speaker 1 (11:03):
You feel like it's normalized the process of taking
helping hands, and it's notjust about money, but it could
be the advice, or it could besomeone backing you in your
corner.
And yeah, speak with a mortgagebroker before you go into
anything else.

Speaker 2 (11:22):
Yeah, definitely.
You've always got to be cleverwhile buying your first property
, because it'll either leave avery good taste or a very bad
taste.
So you've got to be carefulwhere you set your first foot
going around, because I've seenpeople that have done extremely
well.
Like you know, they plan everymove.
They buy right.
So I think people don't makemoney while selling.

(11:43):
I think they make money whilebuying, because you've got to
buy smart yeah very well said, Ithink as a first-time buyer,
you've got to be very smart andvery quick and with these days
I'm seeing a lot of buyers doingtheir research and due
diligence fairly quick thanbefore.
Thank you, bids, no worries.
Thank you, billy.
It was a great, great chat andI think we should see more

(12:06):
first-time buyers out thereplenty more, plenty more.

Speaker 1 (12:10):
Definitely have a good uh.
Have a good evening easy.

Speaker 2 (12:14):
Thank you, billy, take care good night.
Outro Music.