Sydney’s entry-level homes are disappearing and costs are so high that some first-home buyers are considering leaving Sydney rather than facing a lifetime of renting.

Among them is Norman Ma, 25, a software designer from Newtown who lives in a sharehouse with several friends. Since he left university three years ago, he has kept a close eye on the property market for his first home.

“There’s nothing remotely affordable,” Mr Ma said. In Sydney, less than 4 per cent of houses are available below $400,000.

And that’s with a full-time job on a decent income straight out of university, something he described as “lucky” compared to many other recent university leavers.

Not wanting to rely on his parents, who live on the lower north shore, for a deposit, Mr Ma said he had “no hope” of joining the property market while maintaining his financial independence.

If affordable housing becomes a political focus he might consider staying in Sydney, but if house prices remain high, “I have to seriously consider moving,” he said.

Based on house prices compared to incomes, he said it would be easier to achieve home ownership and a career overseas.

His next stop would be a city where technology employment opportunities are at the top of the pile, that could be London, New York, Singapore or Berlin.

But while Mr Ma is still in the early stages of considering a move, some first-home buyers have already begun their exodus from Sydney’s near-$1 million house price market.

Eleanor Holton, 40, a traffic controller, left Sydney 10 months ago to move to Tasmania in search of a lower-priced entry into the housing market.

“Out here I can get myself a house within eight kilometres of Hobart easily within my price range,” Ms Holton said. She’s currently looking for buying opportunities.

“In Sydney I’d be facing a two-hour commute both ways to afford a home … [anything else] was out of reach,” she said.

The lack of affordable housing for lower income earners and first-home buyers has a “profound social cost”, Monash University demographer Bob Birrell said.

“It’s moving a big chunk of the next generation out of home ownership, [which has] significant long-term implications for their financial wellbeing,” Dr Birrell said.

While home buyers are regularly told to move further out to get onto the housing ladder, he said there was “not much available” on Sydney’s fringe in terms of lower priced housing.

“More [first-home buyers] have to accept apartment living, staying at home longer or looking outside of Sydney. The end-game is not clear,” he said.

First Home Buyers Australia co-founder Daniel Cohen said saving a deposit and the associated purchasing costs is the main issue for younger home buyers.

The recent declines in Sydney’s median price and a slowing market “will definitely help more first-home buyers get their foot into the door,” Mr Cohen said.

But he warned first-home buyers “need more assistance than just a slowing market,” suggesting the government should consider scaling back negative gearing and a re-introduction of grants and First Home Savers Accounts.

When the First Home Owners Grant was substantially increased in late 2008 NSW first time buyer activity doubled, reaching 6150 homes financed in May 2009, Australian Bureau of Statistics data shows.

In the current market, first-home buyers are at about a third of their 2009 levels.