'Extract every last dollar'

"With far fewer investors as a result of the macro-prudential measures and tens of thousands of new apartments in the pipeline, who is going to buy them otherwise?" he said.

Aside from price, sellers were also trying to time their sales. In Sydney's inner west, Ray White's Ercan Ersan said an apartment seller in St Peters, who had a listing of about $600,000 to $650,000, wanted to delay his sales campaign to July 1. While he did not ask for a higher price, the strategy meant there would be more first-home buyers competing for his property, Mr Ersan said.

"This will give them a chance to extract every last dollar. They expect there will be more interest and that puts pressure on competition and ultimately drive a higher price."

An upward impact is already seen in Victoria.

'If prices go up, it won't start wildfire'

But any upward price changes would be temporary because the number of first-home buyers in the market was too small – about 5 per cent of the residential market, Mr Driscoll said.

"There are dozens rather than hundreds of first home buyers and, if prices go up, it won't start wildfire," he said. "First-home buyers might be young in age but they are not gullible."


"If vendors push up prices, they push themselves out of the market," Real Estate Institute president John Cunningham said.

"We will see first-home buyers take a little more ground, but the majority of the market is not in that vein. So you will see the market move to an equilibrium."

Price rises aside, the stamp duty caps of $650,000 and $800,000 posed a bigger problem because they were restrictive. Less than 10 per cent of homes were in these price brackets, agents said.

Alleviating barriers

Sydney's median house price is $1.1 million.

"If the government was serious about alleviating barriers, it would completely abolish stamp duty for first-home buyers, or at the very least make the first $650,000 exempt, irrespective of the purchase price, and not cap it at a price that forces people into apartments to reverse engineer the cycle," Mr Driscoll said.

The Housing Industry Association NSW's executive director, David Bare, was also disappointed the changes "have simply not kept pace with increasing property prices in recent years" and said an exemption to at least $750,000 would have more impact in addressing affordability.

Mr Cunningham said the exemptions should be broadened to $1 million.