Tiny inner-city studios can be a good option for Sydney’s first home buyers, but they’ll need a little help from the bank of Mum and Dad.
Ray White Woollahra agent Ty Demirezen is expecting strong interest in a 24 sqm studio on the top floor of a Spanish Mission block at 18/8 Phillip St, Redfern with a $350,000 price guide.
“It’s the lowest-priced property in Redfern,” Mr Demirezen said.
“The area is doing really well in terms of attracting professionals and people trying to get out of a rental scenario and making their first steps into home ownership.”
And being priced under $650,000, first home buyers won’t be required to pay stamp duty.
Units this small, though, can be difficult to secure finance on: most banks prefer apartments to be 50 sqm or at least 40 sqm.
“But a lot of first home buyers are turning to their parents for help, who have a lot of equity in their own homes,” Mr Demirezen said.
“They’re either helping with the sizeable deposit they’d need for the loan or buying it outright and the kids can pay it back.”
The studio, which has exposed beams, timber floors, built-in cabinetry and enough space for a bed and small dining table, could also be attractive to an investor since it was recently rented for $385,000 a week.
It last traded for $185,000 in 2016 but has been renovated since. Mr Demirezen sold a 17 sqm unit in the block for $500,000 in 2017, though that had off-street parking.
“That was bought by a schoolteacher who was a first homebuyer owner-occupier,” he said.
Small studios in Potts Point can be another affordable option and Citylinks agent Trisiana Muljano confirms many young first home buyers have had family help to secure it.
“The parents pay the deposit or guarantee the loan,” she said.
She says two 31 sqm units in a newly built block at 10 and 14/190 Victoria St, Potts Point would make ideal first homes for young people.
“This opens the door for them,” Ms Muljano said.
“It’s often their first property and then they upgrade and this becomes an investment property.”
She sold a similar studio for $550,000 last month. “We had lots of offers under $500,000 before that but after the interest rate drop confidence started to rise,” Ms Muljano said.
The two units are priced at $555,000 and $575,000.
Studios in the block of 16 are renting out for between $430,000 and $455,000 unfurnished and between $475,000 and $500,000 furnished.