First home buyer activity lifts across Sydney's off the plan apartment market as interest rates steady

First home buyers are back in the market across Sydney.

Having left in droves following the RBA's quickfire burst of interest rate hikes, first home buyers are starting to emerge in the off the plan apartment space.

Data from Apartments.com.au's data product MatterFact shows a 30 per cent spike in enquiry from first home buyers in the first three months of 2024 compared to the last three months of 2023.

Compared to 12 months ago, first home buyer enquiry is up 35%.

The spike in enquiry is part due to more confidence in the interest rate having more than likely reached its ceiling, and part due to an increase in stock levels in more affordable projects. It's now been three consecutive months where the RBA has kept interest rates on hold, and the expectation is, despite higher than expected inflation figures in Q1, that rates will start to come down a few times in 2025, if not earlier.

Data from the ABS suggests first home buyers are too. Nationally first home buyers rose by 4.3 per cent to 9,377 of new loans written after a 5.6 per cent fall in January. In New South Wales first home buyer activity rose 6.4 per cent, double the rate of Queensland. First home buyer loans rose just 1.3 per cent in Victoria.

Dave Milton, CBRE Managing Director of Residential Projects, says they've seen first home buyer numbers increase by 11 per cent in the first four months of 2024 compared to 2023.

Milton says the majority of those first home buyers (56 per cent), are seeking two-bedroom apartments rather than one-bedrooms.

"First home buyers are arguably the savviest cohort in the market at the moment," Milton says.

"They're calculating how much they can spend and they're moving quickly before there are price increases, which are happening across the whole market. They don't want to wait and find their budget, which could have got them a two-bedroom apartment a few months ago, now only gets them a one-bed."

The value of off the plan apartments is too rising quickly. The average sale price for first home buyers across CBRE's projects has jumped over 10 per cent year on year, from $748,000 to $827,000.

Most first home buyers are couples who are buying the more expensive two-beds, CBRE's data shows, happier to pay more for what they want rather than drop their requirements to fall under the government's stamp duty benefits.

The biggest increase in first home buyer activity has been in the Hills District, in particular in Castle Hill's Showground Precinct where CBRE is selling Deicorp's Hills Showground Village and the Ashford.

"First home buyers are recognising the lifestyle Castle Hill offers, with the important driver the new Sydney metro which will open in mid-2024 and connect Castle Hill to Barangaroo in 33 minutes," Milton says.

Then there's the evolution of the northwest growth corridor as a whole. Castle Hill has seen significant investment over the last five years, while its location on the fringe of Chatswood adds further connectivity and another retail precinct.

"It's now a convenient choice for young first home buyers, with access to both the city and an increasing amount of local amenity," Milton says, adding that demand from first home buyers is only likely to increase over the course of 2024.