First-home buyers return to market as entry-level stock tightens across Sydney

For the first time in nearly eighteen months, first-home buyer enquiries are climbing across Sydney's residential market—a shift that's reshaping competition for the city's shrinking pool of affordable properties.

Data from the Real Estate Institute of New South Wales shows first-home buyer activity jumped 22 per cent in the June quarter, reversing a downward trend that began late last year. But the surge masks a deeper problem: the number of properties actually within reach of novice buyers has contracted sharply, particularly in the inner west and eastern suburbs where entry-level stock is now competing fiercely with investors and upgraders.

Suburbs like Strathfield, Merrylands, and Smithfield—traditional first-home buyer strongholds west of the CBD—have seen median values climb to $850,000–$920,000, pushing them beyond the reach of many single-income purchasers even with extended lending. Properties under $700,000 now account for just 8 per cent of overall sales volume, compared with 14 per cent two years ago.

"We're seeing first-home buyers return with more confidence, but they're having to look further out," says a spokesperson from the First Home Buyers' Centre, which recorded a 31 per cent rise in client consultations this quarter. "Penrith, Campbelltown, and the Central Coast are absorbing a lot of that demand."

On Sydney's northern beaches, the entry-level squeeze is even more pronounced. A modest two-bedroom apartment in Dee Why or Curl Curl now starts around $650,000–$700,000, making the area inaccessible for most first-time purchasers without parental co-contribution.

The return of first-home buyer activity does suggest underlying confidence in the market's long-term fundamentals. Strong migration into NSW—particularly skilled workers settling in inner-west precincts around Marrickville and Dulwich Hill—continues to underpin demand. But clearing rates remain volatile, hovering between 65 and 72 per cent, indicating buyers are increasingly selective.

Mortgage brokers report that rising serviceability scrutiny from lenders has also narrowed the pool. A first-home buyer with a $600,000 budget now needs to demonstrate significantly stronger income documentation than six months ago, effectively lifting the practical entry point by another $40,000–$50,000.

The standout bright spot remains newer apartment markets in emerging precincts—Barangaroo, Waterloo, and along the Western Sydney aerotropolis corridor—where developer incentives and off-the-plan purchasing have kept some stock accessible. Yet even there, the window is closing fast.

This article was compiled by AI from the sources linked above and screened before publishing. See our editorial standards.