Sydney first-home buyer interest picking up – but not silver screen-worthy – in wake of government grant

Emerging buying interest is again expected from Sydney first-home buyers this weekend for off-the-plan projects, due to the $15,000 government grant available for new home purchases, which kicked off October 1.

However, because many developers were forced to offer incentives in the three-month "vacuum" between its NSW state budget announcement and its October 1 introduction, the initial response has not been as dramatic as might have been anticipated.

The grant is available for first-home buyers buying or building a new home up to a value of $650,000.

In addition, first-home buyers pay no stamp duty on new homes valued up to $550,000, a maximum saving of $20,240.

One project, the Montrose development in North Sydney (pictured below), which features a rooftop cinema, sold 25 apartments off the plan last weekend, six of them to first-home buyers in a pre-launch VIP sale.

The official launch of Montrose will be this weekend.

Curtis Field, director of project marketing at Colliers International, which is marketing Montrose, tells Property Observer a rooftop cinema is fairly unique for an apartment project in Sydney, but they are more common Melbourne.

He says the cinema was included in the design to appeal to younger couples and singles who are expected to show interest in Montrose and which will “add some vibrancy” to the project.

“It’s set up like a home cinema. Residents or tenants book it through the body corporate. It could be a great place to watch the grand final.”

Field says inquiries levels have been “really good”, with 25% to 30% of them coming from first-home buyers.

More than half of the 104 apartments in the 10-storey project have been deliberately priced under $650,000.

Studios measuring 40 to 48 square metres are priced from $435,000, with weekly rental potential of about $450 to $500 – a gross yield of about 5.4%.

Prices rise to $920,000 for bigger apartments with better views.

Montrose has been designed by Mayoh Architects and is being developed by Sydney-based Legacy Property led by Princeton University graduate Matthew Hyder and Stewart Nettleton, former NSW state manager for retirement living at Stockland.

Recently completed Legacy projects include the boutique, high-end The Avenue apartment complex in Collaroy on Sydney’s Northern Beaches and the 88 apartment Kantarra project in Lindfield. Legacy has also completed a number of projects in the US.

However, according to David Chittenden, director of residential in Sydney for Colliers International, because developers were forced to offer incentives in the three-month vacuum between the $15,000 grant’s announcement and its commencement (only a $7,000 handout was available up to October 1), the impact has not been as dramatic.

“Every developer tried to prop-up the market in this interim period,” Chittendon tells Property Observer.

“This has watered down the official grants because buyers have been conditioned to expect incentives and discounts.”

In the past, Chittendon says it was a sign of a “desperation 101” if you advertised incentives for a project but it has since become “need 101” because developers needed some first-home buyer interest.

He says the real benefits have gone to second and third home-buyers and some investors, who have been able to access $15,000 incentives and discounts.

“It’s difficult to discriminate just because someone is not a first-home buyer.”

However Chittendon has noticed a pick-up from first-home buyers with more visits to display suites of other projects being marketed by Colliers International aimed at this market segment.

These include La Vista in Kogarah on the Princess Highway, with views across Botany Bay, featuring one, two and three bedroom apartments, with two-bedders priced from $519,000.

Colliers is also marketing the Carleton Estate Apartments in Summer Hill in the inner west, featuring 78 apartments across four buildings, being developed by Nascon with one-bedders starting from $519,000.

Other Sydney developers have noted an increase in first-home buyer inquiries.

A spokesperson for developer Becton tells Property Observer there has been “a significant uplift in first-home buyer enquiries and reservations in the last several weekends" at its Divercity Waterloo project, where one-bedroom apartments are priced under $500,000. Divercity amenties include an outdoor pizzeria, a health club and an outdoor yoga studio.

“Last weekend we took five reservations of which four were first-home buyers. We currently have 10 contracts with first-home buyers awaiting exchange," says the Becton spokesperson.

Mark Mendel, CEO of FindInvestmentProperty.com.au, which promotes new residential projects, says there has been a “surge” in enquiries from first-home buyers since October 1.

“This has increased even more in the first few days of October as FHB look to take advantage before the rush of buyers expected before Christmas,”he says.

“Where we may have had four out of 10 enquires being first home buyers earlier in the year, over the last week this has increased to eight out of 10 buyers.

"September was our biggest month ever because of the additional enquires from first home buyers and it looks like October we'll beat it again," says Mendel.

Adam Sparkes, Frasers Property Australia’s group sales manager, which is building the $2 billion Central Park mixed-use precinct on Broadway in Chippendale in partnership with Sekisui House Australia, says they have fielded a “large volume of inquiry from first-home buyers seeking to take advantage of the new government grant and stamp duties savings on offer for new developments".

“Our agents at both Central Park and Putney Hill have forwarded several new sales advices across varying apartment types with prices ranging from $480,000 through to $650,000.

“We expect the level of inquiry from first time buyers to remain steady over the coming 15 months as the full grant and concessions remain in place.

At The Mark, the third residential tower launched at Central Park, one bedroom suites start from $475,000. Another residential tower in the development, Park Lane, offers one bedroom suites from $495,000.

A spokesperson for Sekisui House, which is developing The Waterfront at Wentworth Point and The Hermitage in south west Sydney, says they are expecting a "significant increase from first-home buyer enquiries".

"Whilst no product is available below $550,000 for maximum stamp duty concessions, we are seeing enquiry for  sub-$650,000 product.

Sekisui House has made some reviews of pricing to ensure a maximum number of units fall below $650,000.