A young couple in Sydney has purchased a two-bedroom flat for $922,000, despite the property having a broken shower and faulty windows. Linly and Lena, who asked for their surnames to be withheld, secured the Ashfield home at a $28,000 discount after the auction passed in below the $950,000 reserve.
The couple relied on multiple forms of assistance to enter the market: steady incomes, help from Linly's parents, the federal 5% deposit scheme, and New South Wales' stamp duty discount. They were the only bidders at the auction, with no investors competing against them.
Real estate experts attribute the cooling market to federal budget tax reforms that have discouraged investors. The Albanese government argues that generous tax concessions for property investors have made it overly difficult for first-home buyers to compete. In Melbourne's inner north, a two-bedroom unit in Brunswick East sold below the vendor's reserve after two young couples bid against each other.
Investor activity has declined sharply. Westpac predicts a one-third fall in investor demand, and Loan Market reported a 23% drop in investor mortgage applications in May. First-home buyer applications fell by 12% over the same period. Treasurer Jim Chalmers welcomed the falling clearance rates, saying it gives first-home buyers a fairer chance at auctions.
Despite the cooldown, affordability remains a challenge. Lena noted, 'Even with all the investors being scared off, we’re still being squeezed. Negative gearing has squeezed us into a place that’s pretty punishing.' The couple's experience highlights the persistent difficulties faced by first-home buyers even as the market shifts.
