It has long been touted as the dream all Australians share.

But the NSW Real Estate Institute says unless the state government intervenes, new home buyers’ will only be imagining packing their bags and moving interstate.

The institute’s Young Agents Chapter Chair Eddy Piddington said the state government’s move to restrict first home buyers’ incentives to new properties was simply not working.

“Most people don’t really want to move to Penrith to build a new house and you can’t get a brand new property for $500,000 anywhere else (in Sydney),” he told AAP.

He said those looking to enter the market for the first time were being “smashed by investors” taking advantage of low interest rates.

This was exacerbated by ever-increasing prices.

The 27-year-old Sydney agent, who is also an investor, said figures released by Bankwest last week showed the number of first homebuyers had fallen by 44 per cent.

“My tenants pay more than what the mortgage is costing me … it makes me worry for the future,” Mr Piddington said.

“Incentives for first homebuyers purchasing existing properties must be reintroduced or NSW must face the reality that they will relocate out of the state where it is more affordable.”

The comments come after Treasurer Mike Baird last month announced the state had posted a $239 million surplus for 2012-13, thanks mainly to stronger-than-expected stamp duty receipts which added around $198 million to the coffers.

The government announced last year that it was dumping the $7000 first home owner grant and end stamp duty exemptions worth up to $17,990 for first homebuyers purchasing existing homes.