🎧 Episode 3: The Hidden Traps of First Home Buyer Incentives – A Real-Life Case Study
🎙️ Introduction
In Episode 3 of the Your First Home Buyer Guide podcast, seasoned Buyer's Agents Veronica and Meighan break down a real-life case study that reveals the potential pitfalls of rushing into a property purchase to take advantage of first home buyer incentives. In their warm, no-nonsense style, the duo helps listeners understand how government grants can distort decision-making and lead first-time buyers to poor outcomes—especially when buying land in new subdivisions or off-the-plan apartments.
With nearly 50 years of combined experience, the hosts peel back the layers on deceptive pricing, poor-quality developments, and the importance of strategy over urgency. Whether you're just starting to explore your options or feeling the pressure of a looming pre-approval expiry, this episode is packed with cautionary insights and actionable advice.
🔑 Key Takeaways
1. Incentives Can Backfire—And Cost You More in the Long Run
Veronica and Meighan highlight a key principle: government grants can lead first home buyers to make rushed or ill-informed decisions. The case study of "Anna," a Melbourne buyer chasing incentives like the First Home Owner Grant and HomeBuilder, shows how focusing on short-term bonuses can blind buyers to long-term risks, like negative equity or poor capital growth.
2. New Builds Often Hide Extra Costs
While building a new home might sound exciting, Anna's situation reveals the hidden expenses that quickly stack up—sloping land, site costs, service connections, landscaping, blinds, floor coverings, and even basic lighting. Many so-called "fixed price" contracts for new homes don't include these essentials. Buyers must budget for the real total cost—not just what's advertised.
3. Don't Be Fooled by Price Ranges or Generic Advice
Anna made the mistake of offering 10–15% below the asking price based on advice from Google—an approach that left her ignored by the selling agent. Veronica and Meighan stress that negotiation strategies must be tailored to the property type, market conditions, and seller motivations. Blanket advice can cost you opportunities and credibility.
4. The Real Estate Agent Does Not Work for You
A common first-home-buyer trap is expecting help from the selling agent. The hosts explain clearly that agents are legally and ethically bound to represent the seller—not you. It's not their job to guide you, and their loyalty lies with the vendor. This misunderstanding leaves many buyers disillusioned or vulnerable to manipulation.
5. A Flood of Supply = No FOMO
One major reason Anna was feeling pressure was the fear of missing out. But with 80+ blocks of land for sale in her suburb alone—and more subdivisions coming—there was clearly no scarcity. Veronica and Meighan urge listeners to recognise when FOMO is emotionally driven rather than market-driven, especially in new estates where supply is plentiful and ongoing.
6. Don't Overpay for Sloping or Inferior Lots
Anna was considering a sloping block that would cost more to build on, yet was priced higher than nearby level lots. The hosts warn against emotional decisions driven by perceived location or agent commentary. Think about resale value, usability, and livability before committing to a tricky block.
7. Be Wary of Developer Sales Data
Pricing in new subdivisions isn't set by transparent market forces. Developers often set prices like retail tags—think supermarket shelves—and those prices are rarely negotiated. Worse, many sales figures are misleading due to post-settlement rebates or internal "non-arm's-length" transactions used to inflate perceived value. This data can't be relied upon to determine market worth.
8. Understand the Depreciation Trap of New Homes
A brand new home may seem shiny and perfect, but it starts to depreciate the minute you settle—just like a new car. The building loses value even if the land appreciates slowly. This undermines the very capital growth you're hoping to achieve. And unlike you, future buyers won't get grants to purchase your property, reducing the resale appeal.
9. Open Your Eyes to Established Properties
One of the biggest missed opportunities for first home buyers is ignoring the established market. Anna, like many buyers, was focused solely on new builds because of the incentives. But the hosts reveal that similar—or even better—value can be found in older homes on larger blocks. Often these offer more land, better layouts, more light, and less risk of instant depreciation.
10. Know How to Deal With Agents (and When to Walk Away)
When a selling agent stops returning your calls, don't panic—just move on. Veronica and Meighan advise buyers to work cooperatively with agents, especially in markets with lots of choice. And when dealing with corporate sellers or bulk land holders, understand they can afford to wait for the right buyer—they don't need to negotiate with you if they think someone else will pay full price.
11. New Doesn't Always Mean Better
Through the story of a client obsessed with new apartments, the hosts share a powerful comparison: a newer, smaller, poorly built, dark apartment vs. an older, larger, brighter one with better layout and air flow—for the same price. After visiting both, the client was able to make a smarter choice and avoid buying based on aesthetics alone.
12. Rebates Can Distort the True Price
In the world of new builds and off-the-plan sales, buyers are often promised rebates—$20K or more—after settlement. These are rarely reflected in sales data, which misleads other buyers into thinking the property sold at full price. Valuers know this trick and often exclude such sales from their assessments, which is why many new builds fail to value up at contract price.
13. Don't Chase "Free" Money at the Expense of Your Future
Veronica and Meighan stress this repeatedly: just because a grant is available doesn't mean you should use it. Government incentives exist to stimulate the construction industry—not help you build long-term wealth. If you focus on chasing grants instead of value, you may end up paying more for a property with lower potential and higher risks.
14. Price Setting vs. Market Value
In new builds, prices are often set by developers and don't reflect actual market value. When you sell, you won't be selling brand new anymore—and your buyer won't get incentives. That means you're subject to the rules of true market value, which could be much lower than what you paid. Understanding this difference is critical before committing to a new build.
🎓 What You'll Learn From This Episode
• Why buyer incentives can be more dangerous than helpful.
• How to evaluate the true cost of a house-and-land package.
• What the real estate agent's role is (and isn't).
• How to avoid misleading sales data in new developments.
• How to manage negotiation, even if you've already made a mistake.
• The advantages of buying established property in better locations.
• Why focusing on strategy—not urgency—leads to better property outcomes.
