Help from the government for first-time buyers purchasing a home is becoming redundant as the cost of small apartments in Sydney is overtaking the maximum price allowed to still receive stamp duty reductions, industry experts claim.

The NSW government’s First Home – New Home scheme provides no stamp duty breaks for first-home buyers paying more than $650,000 for a home. A full exemption is only available up to $550,000.

When the scheme was started in 2012, this cap would have covered most entry-level buyers as the median price for a one-bedroom apartment was $420,000.

But now that the median price of a one-bedroom unit is $630,000 the thresholds are “inadequate” and should be revised, Real Estate Institute of NSW chief executive Tim McKibbin said.

Even under the assistance scheme, a $630,000 property incurs a stamp duty bill of almost $20,000. A grant of $10,000 is available for homes up to $750,000 in value.

Adam King and his girlfriend, both 27, have been looking to buy their first home in Sydney for more than a year. But the young professionals found prices of one-bedroom apartments going “crazy” when they went to auction.

“It’s really tough for everyone and we’ve already had to change our expectations,” Mr King said.

A one-bedroom apartment that he unsuccessfully bid on – 8/36 Bream Street, Coogee – was expected to sell for $700,000. It went for $890,000.

In 2010, the same apartment sold for $590,000.

By considering this apartment over a brand new property, which experts say home buyers pay a premium on, he was already ineligible for any government assistance. But even if the property was new and King was willing to pay that amount, he wouldn’t have received any assistance.

In 2015/16, 9400 people claimed the First Home Owner Grant and 9522 claimed stamp duty concessions.

When asked if the government was going to review the thresholds, NSW Treasurer Gladys Berejiklian said they were open to tax reform, including looking at stamp duty and were “always looking at ways of making housing more affordable”.

“We believe the most effective way of doing that is to increase supply – something we have focused on since coming to office in 2011,” Ms Berejiklian told Domain, noting “record housing approvals and completions”.

This comes as NSW Planning Minister, Rob Stokes, has blamed negative gearing tax breaks for worsening housing affordability, and said new supply on its own will not make property affordable.

But while increasing supply is part of the solution, “it’s not the whole solution,” John Cunningham, director of Cunninghams Real Estate and president of the REINSW, said.

He suggested a 50 per cent stamp duty concession on properties up to $1 million would be more appropriate, as well as allowing first-home buyers of established homes to be eligible.

“With where the median price is now it’s a bit of a furphy that it’s helping first-home buyers at all,” Mr Cunningham said.

Even increasing the cap to $850,000 would capture far more first-home buyers, said Robert Mellor, managing director of property research firm BIS Shrapnel.

“The reality is they probably should increase the caps given where prices have gone in the past few years,” Mr Mellor said.

“It’s a long-term problem and at some point they’re going to see it bite.”

Cohen Handler buyer’s agent Natalija Tanevska recently helped a 30-year-old purchase her first home in Stanmore after the young buyer had searched for more than six months.

The one-bedroom apartment, without parking, was bought for $580,000 pre-auction.

They were “lucky” to secure it at this price, she said, estimating it could have sold for more than $600,000.

“[Market prices] are anywhere from $550,000 for a real entry-level one-bedroom apartment through to $850,000,” she said.

Binvested co-founder Nathan Birch agreed the government could be doing “a lot more” to help young buyers.

“Given the median house and apartment price, it’s basically a given you’ll be hit with the additional fee, regardless of the cap the government promises.”