Where to find a house in Sydney on a budget of $1.5 million

Sydney first-home buyers would have more choice under Labor’s proposed expansion of the First Home Guarantee scheme, but they would need to look beyond the inner suburbs to find a detached house.

The existing scheme lets first home buyers purchase with a 5 per cent deposit a home up to $1.3 million and avoid lenders’ mortgage insurance, but Labor last Sunday pledged it would increase greater Sydney’s price cap to $1.5 million.

First home-buyers could purchase a house in Terrigal on the Central Coast under Labor’s proposed expansion of the First Home Guarantee scheme.Credit:

This would allow buyers to buy in Gosford, Sutherland, Canterbury-Bankstown, Parramatta and many pockets of the western suburbs, based on Domain’s House Price Report for the March 2025 quarter, released on Thursday.

The most expensive suburbs where the typical house comes into reach are Terrigal, Bangor and Loftus ($1.5 million medians), Padstow ($1,498,000) and Panania ($1.49 million).

There is greater choice for units. Suburbs within reach stretch to the inner city, the inner west, the north shore, the northern beaches and the eastern suburbs. The upper end is Waverley ($1.5 million), Breakfast Point ($1,498,000), Woollahra ($1,465,000) and Bondi Beach ($1.45 million).

The policy would also remove the income eligibility caps of $125,000 for individuals and $200,000 for couples, for the scheme introduced by the Morrison Coalition government.

Sydney’s property prices mean saving for a 20 per cent deposit has become near-impossible without the bank of mum and dad or a six-figure salary.

Sydney’s median house price is at a record high of $1,691,731, according to Domain data released this week. Unit prices surged to $823,467.

The Coalition also pledged last Sunday that people would be able to claim a tax deduction on newly built homes.

First-home buyers could draw from their superannuation, taking out a maximum of $50,000, or 40 per cent, to pay for a deposit under Coalition policy.

Domain chief of research and economics Dr Nicola Powell said buyers needed to be cautious about how much debt they take on.

“A 5 per cent deposit allows you to fast track your purchasing, but if you’re borrowing over that million dollar mark, the burden of that mortgage will be high,” she said.

Powell said Labor’s policy would increase demand towards the more affordable end of the housing market and that it was likely to push up property prices.

“It’s like flicking a switch. All of a sudden, it brings a wave of buyers to the market. It’s likely to elevate property prices,” she said.

Centre for Independent Studies chief economist Dr Peter Tulip said Labor’s policy could encourage reckless borrowing.

“The government is inviting buyers to make a one-way bet on the housing market. If prices go up, their gains are unlimited, but if prices fall, then the buyer’s loss is limited to 5 per cent with the taxpayer on the hook for the rest,” he said.

“Labor is inviting buyers to gamble with the taxpayers’ money. Under the Coalition, they’re gambling with their retirement accounts. Expect more prudent borrowing from the Coalition’s approach. ”

Tulip said there was not enough focus on supply and the benefits were going to sellers.

“The recipients will go to auctions and bid more, and often they will bid against other recipients. Neither is better off as the benefit all goes to the seller,” he said.

MortgageWorks director Anthony Roddy said the First Home Guarantee was brought up by first home buyers in the first conversation. He described the amendments as positive.

“No income threshold and the increase in purchase price caps are meaningful changes,” he said. “It’s not going to get you a four-bedroom house, but it puts more options on the table.”

Roddy said the choice of Sydney suburbs was greater when the scheme first came out in 2020 but that it had changed due to soaring property prices.

“Five years ago, I had clients purchasing around Dulwich Hill and Camperdown. With the proposed scheme, that’s likely unobtainable.”

Fiona Nicholson and Hugo Lohrer have been looking for a home for about six months.Credit: Dion Georgopoulos

Fiona Nicholson, 35, and her partner Hugo Lohrer, 34, live in Petersham and have been looking for a home for about six months. They consider the revised scheme to be a game-changer.

“I emailed our mortgage broker and said ‘hold the horse. This could change everything’,” Nicholson said.

Nicholson said with the existing scheme they would have to move to Orange or Mudgee to afford a house, but they could now afford the Blue Mountains or Wollongong.

“There’s flexibility. A house in the inner west is probably unreachable, but you could with an apartment,” she said.

Nicholson said the revised scheme was a great opportunity for those without the bank of mum and dad, something her mortgage broker, Rob Lees of Mortgage Choice, agreed with.

Lees said: “It creates more equality. Not everyone’s parents are in a position to help, so it creates a level playing field. The battlers get a bit more of a go.”