If you are looking to buy your first home, you have probably heard that property prices are still moving, but not all parts of the market are behaving the same.
Right now, we are seeing a clear trend: entry-level homes are rising faster than higher-end properties.
Here is what is actually driving that, and what it means for you as a first home buyer.
What is causing this shift?
1. Borrowing capacity is doing the heavy lifting
With interest rates higher than they were a few years ago, most buyers cannot borrow as much as they used to. That naturally pushes more people into lower price brackets, more affordable suburbs, and entry-level properties. The result is more buyers competing for the same properties.
2. First home buyers are staying active
Despite higher rates, first home buyers are still entering the market, often driven by rising rents, government incentives, and the desire to get into the market sooner. This keeps demand strong exactly where entry-level properties sit.
3. Investors are competing in the same space
Investors are also targeting more affordable properties right now, because rental demand is strong and yields tend to be better at the lower end. So you are not just competing with other first home buyers, you are also competing with investors.
4. Higher-end homes are more sensitive to rate changes
At the top end of the market, things are a bit different. More expensive properties rely heavily on larger loans, and when rates rise, borrowing capacity drops significantly, fewer buyers can afford those homes, and demand softens. That is why price growth slows at the higher end.
What this means for first home buyers
You are in the busiest part of the market. The majority of buyers are looking in the same price range as you, which means competition is strong.
Prices can move quickly. Well-priced entry-level homes do not tend to sit around for long. If something is good value, it often gets snapped up quickly, sometimes with multiple buyers involved.
Being prepared makes a big difference. In this type of market, preparation is not optional, it is an advantage. That means having:
- Your borrowing capacity understood
- A pre-approval in place
- Your deposit ready
- A clear idea of what you are looking for
The bottom line
Right now, the affordable end of the market is doing the heavy lifting when it comes to price growth. That does not mean it is a bad time to buy. It just means you need to be clear, prepared, and ready to act when the right opportunity comes up.
If you are not quite sure where you sit or what your next step should be, it is worth getting clarity early. It can make the whole process a lot smoother, and a lot less stressful.