Sydney house hunter rages at high prices

Lot of tax incentive

Misson and his wife, who works as a teacher, earn a decent income. As long as he works in Sydney, he is more likely to buy an investment property in Newcastle and rent in Merrylands, 25 kilometres west of the city.

He said negative gearing was inflating house prices around the area and should be scrapped. "The tax incentive is completely unreasonable," he said. "It would piss a lot of people off but at the end of the day it's a lot of tax incentive."

Janine Warner, a 35-year-old graphic designer, said she wanted to buy Riverstone but couldn't afford to.

"I went through a Riverstone agent who was selling crappy red bricks in tiny little blocks. Around Riverstone you can't get anything under $700,000. I reckon there's a massive bubble around there," she said.

Warner blamed foreign investors. "There are a lot of Indians and Asians around," she said. "I would say it's a mixture of both residential and investment buyers."

Instead of buying near Riverstone, 48 kilometres north-west of central Sydney, four months ago she moved even further out and bought a three-bedroom house in South Windsor on a 550-square-metre block of land with an in-ground pool and a separate garage for $580,000. She expects the value to drop in the medium term and recover the value in the longer term.

She said the area was traditionally on the rough side, but had gentrified as young families moved in.

"It used have ... drug addicts and ice addicts and housing commission." Now it's mostly first home buyers, people in their early 30s with a couple of young kids, she said.

Parramatta City Council mayor Paul Garrard also blamed foreigners for inflating housing prices in western Sydney.

"There are a significant amount of Chinese and Indians buying houses at exorbitant prices, I'm not sure where the money is coming from," he said.

Mr Garrard said in western Sydney, about 14 per cent of population reportedly struggled to pay their mortgages, which is three to four points higher than the Sydney average.

Adrian Chand, a 25-year-old mechanic who bought two investment properties in western Sydney, is optimistic and wants to buy another.

Initially he was denied a loan. Then a mortgage broker suggested he buy a house with his parents' house as a collateral. His loan for $530,000 was quickly approved.

"I had a family friend who goes, 'I could sort out your paperwork. Just need your parents to help you out'," he said.

"He came over. Negotiated with what's going on and the approval didn't even take 24 hours."

He now has an investment property in Oran Park and another near Campbelltown.