Some NSW developers claim big first-home buyer rush, but is it hype or reality?

The NSW government’s $15,000 handout for first-home buyers purchasing a new property, including off-the-plan apartments, is 12 days old, and some developers are suggesting enormous spikes in inquiries and sales to this market segment.

While the $15,000 handout applies to purchases up to $650,000, first-home buyers can save $35,240 if they buy off the plan for less than $550,000, the upper limit to benefit from a maximum stamp duty concession of $20,240.

An upper price limit of $550,000 would restrict most Sydney first-home buyers to a one-bedroom inner-city apartment or possibly a two-bedroom unit further out – ruling out most first-home buyers with children. Two-bedroom apartments in Meriton's Eon Zetland project near Green Square start from $690,000.

Meriton, Australia’s biggest apartment builder, claims that first-home buyers numbers have shot up since the grant was introduced, from just 5% of the market to 45% of all Sydney metro sales – taking up the slack from declining Chinese buyers and investors.

Meriton does not provide any specific sales numbers in the published News Ltd article.

And while it does say the Chinese buyers have withdrawn from the market, it does not say what has happened to second- and third-home buyers and investors, who were able to access developer discounts and incentives aimed at keeping the market ticking over in the three-month period from July to October before the official government first-home buyer grant doubled from $7,000 to $15,000.

Possibly these market segments have dwindled as the developer incentives have disappeared.

CBRE is marketing DNA, a 119-apartment development in Camperdown ranging from studios to two-bedders on the corner of Pyrmont Bridge Road and Barr Street and being privately developed by Mark Mezrani.

Murray Wood, director of residential projects at CBRE, says DNA received over 1,000 enquiries in a week, with 70% of these coming from first-home buyers

The actual sales conversion data has not been released.

Not all developers are reporting an immediate jump in sales or enquiries from first-home buyers.

Japanese developer Sekisui House has reported no pick-up in inquiries for two NSW projects – The Waterfront at Wentworth Point and The Hermitage in Gledswood Hills in Sydney’s outer south-west.

The sales teams for these projects report that sales to first-home buyers at The Waterfront had been “very quiet leading up to the increased grant and stamp duty concessions”.

There is an expectation of a “significant increase” in first-home buyer enquiries for properties priced under $650,000, with Sekisui House having recently made some reviews of pricing to ensure maximum number of units fall below $650,000.

Sekisui has no product priced under $550,000 to take advantage of the maximum stamp duty concession.

Last week David Chittenden, director of residential in Sydney for Colliers International, said the wind had been taken out of the sales of the new first-home owner grant because developers were forced to offer incentives in the three-month vacuum between the $15,000 grant’s announcement and its commencement to all buyers to keep sales ticking over.

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

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

Mark Mendel, CEO of findinvestmentproperty.com.au, which claims a big spike in first-home buyer enquiries since the introduction of the $15,000 handout says a popular strategy among many of its clients is to purchase a property as a first home buyer and move in to it for six to 12 months before turning it into an investment and going to rent where they were previously.

“This allows people to get into the market without the burden of the additional costs of buying a property,” he says.