How to buy the right property as a first home buyer
This guide walks you through how lifestyle, budget, and location affect your property choice, the advantages and considerations for each property type, and how to match your circumstances with the right option. For the step-by-step buying process, read our pre-approval to home ownership guide.
Quick summary: Freestanding houses offer full land ownership, privacy, and renovation freedom but cost more and require more maintenance. Townhouses and strata apartments provide lower entry prices, less maintenance, and better locations but come with shared walls and strata fees. Land plus construction gives you complete customisation and access to the First Home Owner Grant. Use our property deposit calculator to see what each option means for your finances.
Understanding what you need in a home
How lifestyle affects your choice
Your daily routine plays a significant role in deciding the best property for you. Consider how close you need to be to work, public transport, and amenities. Think about whether you prefer a quiet, private home or a more social environment. Assess how much time and effort you can realistically put into home maintenance. Factor in your family plans and whether you need extra space for growth, a home office, or flexible living areas. Our location, condition, and vibes guide helps you evaluate these lifestyle factors in detail.
Setting a realistic budget
Your budget affects not just what you can afford now but also your future financial stability. Property types vary significantly in cost, even within the same suburb. Ongoing expenses such as council rates, strata fees, insurance, and maintenance all add up differently depending on what you buy. Resale potential varies too, with some property types appreciating faster than others. And renovation opportunities differ between houses, townhouses, and apartments.
Understanding your Loan to Value Ratio and deposit options determines which property types and price ranges are accessible to you. The Home Guarantee Scheme (5% deposit, no LMI) and the Help to Buy Scheme (2% deposit, government equity) can expand what is possible for you as a buyer. Use our property deposit calculator and mortgage repayment calculator to model different scenarios.
Location matters
The location of your home directly determines what property types are available and at what price. City living typically means apartments and townhouses. Suburban areas offer more detached houses with yards and family-friendly amenities. Regional areas provide larger blocks at lower prices. Growth areas feature new developments with house-and-land packages. And established neighbourhoods offer character homes with renovation potential. Knowing your preferred location helps narrow down the best options for your situation.
Freestanding houses
A freestanding house remains the traditional dream for many first home buyers, and for good reason. You own both the land and the home outright, giving you complete control. There are no shared walls, meaning more privacy and less noise. You get spacious indoor and outdoor areas suitable for families, pets, or hobbies. You have the freedom to renovate, extend, or modify as you please without strata restrictions. And private yards provide space for children, pets, gardening, or entertaining.
However, freestanding houses come with responsibilities. They are typically the most expensive property type in any given area. You are in charge of all maintenance, from gardens to structural repairs. Ongoing costs including council rates, insurance, and utilities tend to be higher. Upkeep requires significant time and effort, especially for larger properties. And affording a house may mean moving further from the city centre. A freestanding house is an excellent choice if you want space to grow, value privacy, plan to start or expand a family, have pets, or seek long-term capital growth.
Townhouses
Townhouses offer an excellent balance between affordability, space, and location. They are generally more cost-effective than detached houses in the same area, helping buyers secure a home in desirable suburbs. Multi-level designs provide natural separation between living and sleeping areas. Smaller outdoor areas and shared maintenance responsibilities mean less upkeep than a house. Many townhouses feature private courtyards, balconies, or small gardens. And they are commonly found in sought-after inner and middle-ring suburbs with excellent access to amenities, schools, and public transport.
Keep in mind that living in close proximity to neighbours means some noise transfer is possible through shared walls. Most townhouses are part of a strata scheme, which comes with body corporate fees and restrictions on renovations, pet ownership, and shared spaces. Outdoor areas are more compact than standalone houses, parking may be limited, and stairs can be a challenge for those with mobility concerns.
Apartments
Apartments offer an affordable and convenient entry into the property market. They are typically the most budget-friendly option in prime locations. There are no gardens to manage, and building upkeep is handled by the strata. Many complexes include amenities like pools, gyms, and rooftop terraces. Secure entry and intercom systems provide peace of mind. Smaller spaces and shared walls help reduce heating and cooling expenses. And apartments are ideal for a lock-and-leave lifestyle if you travel frequently.
The trade-offs include ongoing strata fees that can be high in complexes with premium amenities (ranging from $3,000 to $10,000+ annually), less space and storage than townhouses or houses, noise from nearby neighbours, restrictions on renovations and pets under strata bylaws, limited or no parking in some buildings, shared decision-making on building-wide maintenance, and potentially different capital growth patterns compared to houses. Before buying any strata property, review the strata records to understand fee history, planned increases, and future expenses.
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Buying land and building your first home
Purchasing vacant land and building offers the ultimate opportunity for customisation. You design every detail of your home to match your preferences. You can incorporate the latest sustainable design and smart home technology. In certain areas, building can be more affordable than purchasing established. You pay stamp duty only on the land value, not the completed home. And you can access the First Home Owner Grant ($10,000) for new builds valued up to $750,000 (land plus construction combined).
However, the build process typically takes 6 to 12 months after land settlement. Unexpected expenses and cost overruns are common. Construction loans have unique requirements compared to standard home loans. You may need temporary accommodation while building. New estates may take time to develop essential amenities. And choosing the right builder is critical to the success of your project. When purchasing land, consider the block's orientation, slope, soil quality, available services, easements, covenants, and environmental factors like bushfire or flood risk.
The buying process for each property type
Regardless of which property type you choose, understanding the purchase process is essential. You can buy through private treaty (negotiating directly with the seller), auction (competitive bidding), or off the plan (purchasing before construction is complete). Each method has different timelines, risks, and considerations.
Our property purchase and valuation guide explains how the process works end to end, including how bank valuations determine your loan amount. Securing pre-approval before you start searching gives you certainty on your budget and credibility with sellers. And understanding your genuine savings position ensures your deposit meets lender requirements.
Government schemes can significantly expand your purchasing power. The Home Guarantee Scheme lets you buy with 5% deposit and no LMI. The Help to Buy Scheme requires just 2% deposit with government equity. The FHSSS helps you build your deposit faster through superannuation. And stamp duty concessions can save you up to $30,529. Read about the benefits and risks of low-deposit purchases, and explore all pathways to home ownership to find the right combination. Our choosing the right finance guide helps you select the best loan structure for your chosen property type, and our settlement guide walks you through the final stages of your purchase.
Frequently asked questions
How do I know which property type is right for me?
The right property depends on your budget, space requirements, lifestyle preferences, and long-term goals. Consider how much maintenance you are willing to handle, whether you need outdoor space, how important location is relative to property size, and your family plans. Creating a list of must-haves and nice-to-haves helps guide your decision. A consultation with our team can help you match your priorities with the right property type.
Which property type offers the best investment potential?
Houses tend to offer stronger long-term capital growth due to land value but lower rental yields. Apartments provide better rental yields but may have slower capital growth. Townhouses often offer a balance of both. Land can appreciate significantly in developing areas but provides no rental income until built on. For long-term growth, properties with land in high-demand areas tend to perform best.
What are the main ongoing costs for different property types?
Houses typically incur council rates ($1,500 to $3,000 annually), water rates ($800 to $1,200), insurance ($1,000 to $3,000), and maintenance (approximately 1% of property value annually). Townhouses have strata fees ($1,500 to $4,000 annually) plus some individual maintenance. Apartments have strata fees ($3,000 to $10,000+ depending on amenities) with most maintenance covered by strata. Understanding these costs is part of your budgeting process.
Are apartments a good first home purchase?
Apartments can be an excellent first home if location is your top priority, you are working with a limited budget, you prefer low-maintenance living, or you value amenities like pools, gyms, and security. They may not suit buyers who need more space, want to maximise capital growth, have pets requiring outdoor space, or plan extensive renovations. For many, apartments offer a great stepping stone to a future upgrade.
What should I look for when buying land to build on?
When purchasing land for building, consider the block's orientation (north-facing maximises natural light), slope (level land is easier and cheaper to build on), soil quality (affects foundation costs), available services (water, electricity, gas, internet), easements or building restrictions, block dimensions (ensuring they suit your house design), covenants in estates with strict design requirements, surrounding development plans, and environmental factors like bushfire or flood risk.
How do strata fees work for apartments and townhouses?
Strata fees (also called body corporate fees) cover building insurance, maintenance of common areas, structural repairs, management of shared facilities, administrative costs, and contributions to the sinking fund for major future repairs. Fees vary based on building size, age, amenities, and the number of units sharing costs. Before purchasing, review strata records to understand fee history, planned increases, and upcoming expenses.
Can I renovate or extend different property types?
Houses offer the most flexibility for renovations and extensions, subject primarily to council approval. Townhouses allow internal renovations but external changes typically require strata approval, with limited scope for major structural work. Apartments allow internal cosmetic changes, but structural modifications and external changes are heavily restricted and usually need strata approval. Always check with council or strata management before planning any work.
What is the difference between capital growth and rental yield?
Capital growth is the increase in property value over time, while rental yield is the annual rental income expressed as a percentage of the property's value. For example, a $500,000 property generating $25,000 in annual rent has a 5% rental yield. Houses in established areas typically offer strong capital growth but lower yields. Apartments in inner-city locations often provide higher yields but slower capital growth. Your long-term goals determine which balance suits you best.
Take the next step
Choosing the right property is about matching your lifestyle, budget, and goals with the best option available to you. Start by reviewing our budgeting guide and deposit options, then explore each property type in depth through our dedicated guides on freestanding houses, strata properties, land purchases, and construction.
Use our property deposit calculator, home equity calculator, and mortgage repayment calculator to plan your finances. Learn more about our team, or explore our service areas across 220+ Sydney suburbs.
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Related resources for first home buyers
Continue building your knowledge with our freestanding properties guide for full land ownership and renovation freedom, our strata title guide for apartments and townhouses, our first-time land buyers guide for vacant land purchases, our construction guide for building your dream home, and our location, condition, and vibes guide for evaluating suburbs and neighbourhoods.
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Important stuff:
Please note that the views and opinions expressed in this post are general information only, and this is not financial advice.
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