In the recent New South Wales budget, Premier Gladys Berejiklian announced her housing affordability package. From last Saturday July 1, first home buyers will receive a number of exemptions.
First home buyers wont have to pay stamp duty on homes up to $650,000 from July. Stamp duty will be reduced for properties valued between $650,000 and $800,000 Affordability measures also include a $10,000 grant for first home buyers who are building a house, given the total value of the house and land does not exceed $750,000.
One thing that is new is that a $10,000 grant is also available for existing properties valued up to $600,000. Previously this was just for new dwellings. Some 75,000 homes under construction will be completed in the next financial year in the budget.
John McGrath said NSW State Budget stamp duty cuts and grants for young buyers will “ultimately raise property prices due to higher competition.” But with Sydney and Melbourne at their peak pricing, McGrath suggests softening market conditions might balance out any price effect from greater first home buying activity. ‘Especially if there are fewer investors in the market due to tighter lending restrictions,” he said.
CoreLogic quoted recent ABS statistics showing that first home buyer activity in NSW hit a record low of 7.5 percent of new owner-occupier mortgages last September and had increased only marginally since then to 8 percent in March this year. “The long term average is 17 percent, so we’re a long way off that.
“The budget confirms that with an increase of 9.6 percent in residential property stamp duty revenue in 2016/17, the rivers of gold flowing from property taxes will fund essential services and programs next year and beyond,” she said. “It also now suggests that significant additional costs could be imposed on the supply of the average home. “By 2020 that could add a billion dollars to the cost of delivering new homes in NSW.”
“Sydney’s housing supply pipeline ground to a halt less than a decade ago under the burden of excessive infrastructure taxes, so widening the net risks a repeat of recent history.”
nb: Some of this article’s content has been accessed from a recent article by Tim Lawless of CoreLogic.