The Albanese government’s First Home Guarantee Scheme has been criticised for mostly helping higher-paid professionals.
They’re young, highly-paid and, armed with government support, are spending big in the housing market at a rate that could be locking out other hopeful buyers.
New analysis of ABS data has revealed a wealthy, young elite is emerging in parts of Sydney, often supported by jobs in tech, finance, e-commerce and other high growth industries.
This small elite is highly concentrated in the city’s beach hubs and inner suburbs, which now have the highest population of under-35s earning more than $150,000 a year in the country.
Experts claim such a glut of wealth at a younger age has been exerting pressure on home prices and rents, aided by the recent removal of salary caps on first-home buyer support.
This included the government’s flagship First Home Guarantee Scheme, which helps first-home buyers purchase homes using deposits as low as 5 per cent.
It used to be available only for singles earning less than $125,000 or couples on under $200,000, but the salary caps were scrapped in October, while Sydney price limits were expanded to $1.5m.
Competition for properties under the scheme price caps has been stiff. Picture: Rohan Kelly
Mortgage Choice broker Richard Brown said the majority of first-home buyer clients who have used the scheme since October earned a higher income than the previous salary caps.
“Some of the people who are accessing the scheme are earning as much as $400,000 a year,” he said. “Overwhelmingly, it seems to be supporting higher-income buyers who simply lack savings.
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“Nurses, firefighters, teachers, the people who you imagine the scheme was designed to help, are struggling … inequality among younger (Aussies) is rising.”
Finch Financial CEO Julian Finch said the government scheme was now hurting the very Aussies it was supposed to help: lower income buyers with limited ability to save.
“It has absolutely pushed up prices,” he said. “Since the changes, the people who could qualify for the scheme before are no longer applying. They’ve been priced out.”
Mr Finch added that removing the salary caps meant lower income buyers no longer had any kind of boost.
“It used to be a more level playing field,” he said. “Now you have lower income earners competing with highly paid couples who also get the scheme. How are they supposed to do that?”
ABS data showed the Bondi Beach–North Bondi postcode took the crown as the nation’s epicentre for the young and rich, boasting the highest number of high-income earners under 35.
Bondi Beach and North Bondi have the highest concentration of cashed up under 35s in the country.
Surry Hills and the Erskineville–Alexandria area rounded out the top three, followed closely by Manly–Fairlight and Potts Point–Woolloomooloo.
“Young Australians earning over $3,000 a week are a critical group in shaping property markets,” said Shawn Waugh, Founder of Stop Renting Australia.
“They represent the demographic with the borrowing power to buy early and buy up. Where they cluster, competition is fierce and prices often follow.”
SUBURBS WITH HIGHEST NUMBERS OF HIGH INCOME EARNERS UNDER 35
Source: ABS
Mr Waugh added that first-home buyers on regular incomes, many working the critical service jobs needed for a city to function, were being priced out by Aussies who got wealthy young.
“Sydney remains the powerhouse for young, high-income professionals,” Mr Waugh said.
“They’re concentrated in lifestyle suburbs close to the CBD and the coast – places like Bondi, Surry Hills, and Erskineville.
“These are the same markets where first-home buyers face some of the toughest competition in the country.”
Ray White-Northern Beaches agent Eddy Piddington said areas such as Manly, Fairlight and other beach areas had become more attractive for younger, high-income earners since the Covid pandemic.
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Critics argue the First Home Guarantee boost demands, but does not address supply side issues. Picture: Asanka Ratnayake
“There was a lifestyle shift,” he said. “There are lot of younger couples who have big corporate jobs. They have pretty big budgets.
“It’s not just incomes. There are a lot of younger couples who bought property at just the right time. They have a huge amount of equity they can use to upgrade. Property is a big driver of their wealth.”
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