Selling Under $1.5m to First Home Buyers: An Investor’s Playbook
The bottom line: First home buyers are active in the sub-$1.5m market, but Sydney’s conditions have shifted since spring last year. Values are down, stock is up, and buyers are in no rush. If you’re thinking of selling, getting the fundamentals right — bank lending criteria, comparable sales, and pricing — matters more now than ever.
Where the market actually sits right now
According to Cotality (September 2026), Sydney dwelling values fell 4.7% over the past quarter and sit around 4.6% lower than a year ago. At the same time, listings are up, auction clearance rates have softened, and properties are taking longer to sell. Put simply: there’s more stock for buyers to choose from, less competition pushing them to act fast, and more room for them to negotiate.
None of this means your property won’t sell. It means buyers — first home buyers included — have the luxury of choice and time. They’re comparing your property against several others, they’re in no hurry to fall in love with the first one they see, and they’ll walk away from anything that feels overpriced or under-prepared. Your strategy needs to reflect that.
Know your buyer pool before you set a price
Here’s something a lot of investors overlook: your bank’s lending rules can shrink your buyer pool before a single offer comes in.
Most major lenders won’t finance an apartment under a certain internal living area — and this catches sellers out constantly, particularly with older one-bedroom units and studios in the Eastern Suburbs and the Lower North Shore.
Internal size (excl. balcony & car space) | Typical lender treatment
- 50m² and above | Standard lending terms with most banks
- 40–50m² | Accepted by many lenders, but often on a case-by-case basis or with a higher deposit
- Under 40m² | Frequently declined or capped at a much lower loan-to-value ratio (often requiring a larger deposit)
If your property falls under 40–50m², your pool of finance-dependent buyers — which includes most first home buyers using the 5% deposit scheme — shrinks considerably. It’s not a reason to panic, but it is a reason to price and market realistically from day one (more on this below).
Comparable sales aren’t optional anymore
In a rising market, buyers will stretch to secure a property. In a flat or falling one, they won’t — and they’ll ask their mortgage broker, their buyer’s agent, or Google to confirm your asking price before they commit.
If there haven’t been recent sales of similar properties in your building or immediate area, expect resistance. Buyers (and their bank valuations) lean heavily on recent, comparable evidence. Without it:
- Buyers will assume your price is aspirational and negotiate harder
- Bank valuations could come in under their offer price
- Your property risks sitting on market longer while buyers “wait and see”
If direct comparables are thin, widen the net — look at similar properties in neighbouring streets or buildings, and be ready to explain your reasoning transparently. A buyer who understands *why* you have priced where you have is far more likely to commit than one left guessing.
First home buyers still want move-in ready
This hasn’t changed: most first home buyers are stretching every dollar on their deposit and don’t have $20,000–$50,000 sitting aside for renovations. Properties that need real work — even cosmetic — will be compared unfavourably against similar, presented properties, and priced down accordingly by the market.
Set (and show) your price
Buyers researching online want clarity, not guesswork. A property listed with a clear, realistic asking price / price guide — rather than “contact agent” or a vague guide — signals confidence and lets serious buyers self-select in or out quickly. In a market where buyers have plenty of choice, ambiguity just pushes them to the next listing.
Your price needs to sit close to your comparable evidence, or be demonstrably good value against it. “Testing the market” with an ambitious figure tends to backfire — it burns your best early buyers (the ones who inspect in the first two weeks) and forces a price drop later, which itself could become a red flag to buyers watching your listing.
Patience and flexibility win the day
This is the part investors find hardest, particularly if you have sold before in a hotter market. A few things to keep front of mind:
- Buyers aren’t in a hurry. With values flat to falling, there’s no urgency pushing them to decide quickly. Building in time for buyers to feel comfortable is normal, not a sign something’s wrong with your property.
- Some buyers will test your motivation with low-ball offers. This is a negotiating tactic, not necessarily a reflection of your property’s value. Respond calmly and stick to your evidence.
- Offering flexibility on cooling-off can help nervous buyers commit. NSW’s standard cooling-off period is five business days, but this can be extended by agreement between buyer and seller. A slightly longer cooling-off period — giving a buyer more time to finalise finance or building/pest reports — can be the difference between a buyer signing today or walking away to “think about it.”
- Let go of a fixed timeline. Set a realistic campaign length based on current market data, not last year’s stories, and expect it may take longer than you would like.
- Forget the crowd size. A packed open home feels reassuring, but it is not what sells your property — one committed buyer is all you need. Everyone else through the door is a bonus, not a benchmark.
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What if your property doesn’t tick every box?
- If it’s under 40–50m² internally:
Get ahead of it. Ask your agent to check indicative lending positions with a couple of major banks before you list, so you know your realistic buyer pool. Consider marketing more broadly to cash buyers, downsizers, and investors alongside first home buyers, and price with the smaller pool in mind rather than hoping for a bidding war. Compile a list of recent sales that are less than 40m². - If there are no recent comparable sales:
Arrange for a formal valuation to support your asking price with independent evidence. Broaden your comparable set to similar properties nearby, and be transparent with buyers about how the price was reached — it builds trust and heads off finance-related surprises later in the process. - If the property needs work:
Get quotes for the key items so buyers aren’t left to imagine (and inflate) the cost themselves. Where the budget allows, tackle the highest-impact cosmetic items — paint, decluttering, minor repairs — before listing. If cash flow is tight, financing options exist to fund this work and repay at settlement, so upfront cost doesn’t have to be the barrier.
Why sellers work with Local Agency Co.
We’re a boutique, independently owned agency — not a high-volume franchise chasing listing numbers. Michael and Kristalla have been managing and selling property across the Eastern Suburbs and the Lower North Shore for over 20 years, and many of our investor clients have been with us for decades.
What that means for you:
- Realistic, evidence-based pricing — not an inflated appraisal designed to win your listing
- Flexible campaign strategies — tailored to your property and today’s market, not a one-size-fits-all auction template
- Local knowledge of comparable sales, buyer behavior, and lending patterns across your specific building and street
- A personal, no-pressure approach — we will tell you what we genuinely think, not what’s easiest to hear
Thinking about selling?
If you’re weighing up whether now’s the right time to sell your investment property under $1.5m, we’re happy to talk it through — no pressure, just an honest read of where your property sits in today’s market.
Call us: 1300 258 888
Email: sales@localagencyco.com
Visit: www.localagencyco.com
CONTACT US TODAY TO DISCUSS YOUR PROPERTY WITH A LOCAL PROPERTY MANAGEMENT EXPERT