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August/26 New South Wales Residential

Opening the door to your first home: A guide for New South Wales

Buying your first home Current market participation, government grants and eligibility pathways in NSW

First home buyer new loan commitments in NSW Annual total number of loans & % share of owner-occupier lending, as at Q1/26

First home buyers ramp higher pushing up prices in lowest quartile Solid first home buyer activity in NSW has been supported by rising demand for affordable housing and government incentive packages. New loan commitments to first home buyers continue to account for a significant share of owner-occupier lending, despite a higher interest rate environment. Over the past decade, this first home buyer share rose from 16% to be 34% in Q1/26. Trending 4.7% higher than a year ago, the number of loan commitments to first home buyers in NSW tallied to 28,970 in the year to Q1/26. This remained lower than back in 2021 and 2022 when these loans taken out reached 35,919 and 35,223, respectively.

Source: McGrath Research, ABS

Tracking average sales price for lowest 25% of residential values NSW, plus % price change of this quartile over the year ending Q1/26

At the time, HomeBuilder, the temporary federal construction stimulus grant had been introduced as an economic response to the pandemic. Property values in the bottom quartile of the market recorded strong growth in the year ending Q1/26. Sydney houses grew the fastest at 11% to reach an average $1.125 million, compared to Sydney apartments which grew 3% to $641,000. Regional NSW saw strongest uplift in average apartment prices with 10% annual growth to $591,500 in Q1/26, as houses rose 7% to $738,000. Limited housing supply, population growth and competition from both investors and downsizing owneroccupiers have intensified demand for entry-level homes. Although, recent tax changes are likely to moderate investor activity moving forward, potentially easing competition in the more affordable segments of the market.

Top 5 local markets ranked by lowest average price for houses and apartments NSW, by Local Government Area, as at Q1/26

Sydney Houses

Sydney Apartments

Reg. NSW Houses

Reg. NSW Apartments

+11%

Campbelltown

Cumberland

Central Darling

Moree Plains

$1,142,400

$635,300

$89,600

$232,800

+3%

Blue Mountains

Strathfield

Walgett

Gunnedah

$1,142,600

$735,700

$105,500

$290,900

Blacktown

Campbelltown

Bourke

Murray River

$1,217,600

$741,800

$141,000

$293,600

Central Coast

Parramatta

Bogan

Berrigan

$1,244,400

$753,500

$196,600

$314,600

Hawkesbury

Blacktown

Broken Hill

Armidale

$1,348,600

$775,500

$223,200

$317,000

+7% +10%

Source: McGrath Research

Source: McGrath Research, Cotality

Cost to buy | New South Wales What incentives are available across Australia? First Home Super Saver Scheme | FHSSS Eligible buyers can make voluntary super contributions (often at a lower tax rate) then withdraw to help purchase their first home. Up to $15,000 per financial year and $50,000 in total can count towards the scheme; this can be doubled for a couple. FHSSS can complement the First Home Guarantee and Help to Buy.

Which additional state-based incentives are offered in NSW?

First Home Guarantee | FHG Buy your home to live in within the price cap to be entitled to a deposit guarantee covering up to 5% of the property value. Apply through participating lenders to ensure there is no Lenders Mortgage Insurance (LMI) payable. There are no limits on your annual income or the places available, making the scheme broadly accessible.

Help to Buy equity scheme Buy with a minimum 2% deposit of the property value, with no LMI payable for your home to live in. You share in the home’s equity with the Government, which is 40% for a new home and 30% for an established home, until this is repaid over time or when the property sells. There are eligibility limits on your annual income and only 10,000 places are available each year.

First Home Buyers Assistance Scheme | FHBAS

First Home Owner Grant | New Homes

Established or new homes No transfer (stamp) duty for homes valued up to $800,000. Reduced transfer duty on homes valued between $800,000 and $1 million.

New homes | Newly built Grant of $10,000 is available when the purchase price does not exceed $600,000.

Vacant land No transfer duty on vacant land up to $350,000. A duty concession for vacant land up to $450,000.

New homes | Not yet built When vacant land is purchased and a building contract is signed with a builder, the total combined cost of land price and construction cost must not exceed $750,000 to be eligible for this $10,000 grant.

Three different paths to first home ownership The cost required to buy your first home varies by property price, eligibility and incentives. Using Oxygen Home Loans calculators, these examples show three potential paths to ownership.

Scenario 1

Scenario 2

Scenario 3

Single professional buys an established apartment in Greater Sydney

Couple buys a new house-and-land package in Regional NSW

Essential worker buys a new apartment in Greater Sydney

Property Price

$800,000

$600,000

First Home Guarantee

Help to Buy scheme

Deposit Required (5%)

-$40,000

Deposit Required (5%)

-$30,000

Deposit Required (2%)

Stamp Duty

Lenders Mortgage Insurance

Est. Other purchase costs

-$4,000

First Home Owner Grant Est. Upfront Cost

$44,000

$600,000

-$12,000

Est. Other purchase costs

-$4,000

Est. Other purchase costs

-$4,000

First Home Owner Grant

+$10,000

First Home Owner Grant

+$10,000

Est. Upfront Cost

$24,000

Est. Upfront Cost

$6,000

Definitions

Housing Australia The Australian Government’s housing agency responsible for delivering programs which improve housing affordability, increase housing supply and support home ownership. Website: www.housingaustralia.gov.au Australian Taxation Office | ATO The Australian Taxation Office (ATO) is the federal government agency responsible for administering tax laws, including those relating to property ownership and capital gains tax compliance. Website: www.ato.gov.au Revenue NSW The NSW Government agency responsible for administering taxes, duties, grants and compliance programs across the state. Website: www.revenue.nsw.gov.au Oxygen Oxygen Home Loans provides mortgage solutions and online calculators that can help first home buyers estimate borrowing capacity, repayments, deposit requirements and purchasing costs before entering the market. Website: www.oxygen.com.au/calculators

Recommendation Engage a qualified solicitor or conveyancer from contract review through to settlement. They can identify potential issues, explain your legal obligations and ensure all documentation is completed correctly. First home buyers should also allow for additional costs such as inspections, legal fees, loan establishment charges and moving expenses, and always confirm their eligibility for grants, concessions and government schemes before committing to a purchase.

Lenders Mortgage Insurance | LMI An insurance premium paid by borrowers with a low deposit (typically less than 20%) which protects the lender, not the borrower, if the home loan defaults.

Guiding you home Michelle Ciesielski National Head of Research McGrath Research www.mcgrath.com.au/research

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