House and land a safer bet than off the plan units for Sydney first home buyers: HTW

House and land option in outer western Sydney should be on the radar for first home buyers as off the plan units, in a wide variety of locations, are unable to achieve their purchase price upon settlement, according to HTW’s Month in Review: March 2017. 

The valuation firm says many of these units were originally purchased in stronger market conditions, particularly in 2015.

“This could be disastrous for a first home buyer after saving for a large deposit and having to come up with more money to settle,” the report says.

HTW says yields have tightened across the board with Sydney recording record low returns at 2.8% for houses and 3.8% for units, according to CoreLogic data.

It points to significant price growth and high investor participation that has resulted in a flooded rental market dropping rents.

“Over the last few years many tenants have exited the rental market and become owner-occupiers thanks to the low interest rates and not wanting to miss out on capital growth, this has resulted in additional rental vacancy’s hitting the market putting downward pressure on rents.

“A threat for investment are highly geared investors requiring a strong rental return to service their mortgage, an oversupply of rentals in some sectors of Sydney may result in a number of forced sales of investment properties due to serviceability issues.

“If too many sales occur at the one time this may result in a drop in values.”

The firm warns that this is a particular concern for large scale unit complexes with high investor participation rates.

“If you can’t access the property market the traditional way we have seen in the past other methods that may also work.”

The firm suggests joining forces with close friends or family to ‘group buy’ a home, buying an investment property interstate or sourcing support from their parents as alternative methods, albeit with their own pros and cons to consider.

A house and land package at Lot 462 Yass Street, Gregory Hills (above) has been listed for $600,000.

Similarly a house and land package for a three bedroom house at Lot 1335 Goodluck Circuit, Cobbitty (below) has been listed for $644,400.