New South Wales Implements Housing Affordability Scheme
Announced Thursday, Premier Gladys Berejiklian announced a number of new property reforms aimed at helping first home buyers enter the market.
This is the first response from Ms. Berejiklian's declaration in January that she would make it a priority to do something to help new first home buyers after becoming Premier in January
The new reforms will cost the state more than $1 billion dollars in funding but have reiterated that it's crucial to help level the playing field with outside investors However some experts have criticized that instead, it's only going to push up house prices.
Under this package, first home buyers of existing and new properties up to $650,000 won't have to pay stamp duty on July 1st of this year.
Previously the existing limit was $550,000 and did not include existing homes in the scheme. There will also be stamp duty discounts on properties up to $800,000.
Estimates by the government have said that this will save home buyers up to $34,000 when buying their first home.
Tim Lawless, head of research at CoreLogic, the leading property research company in Australia, have warned that it might be a self-defeating reform.
“Abolishing stamp duty for first home buyers is likely to create some headaches for eligible buyers who have recently entered into contracts,” Lawless said.
“Additionally we can expect first homebuyer activity to stall before surging higher on July 1, 2017. The long-term outcome may be self-defeating due to higher demand pushing up prices.”
CoreLogic said that over the past 12 months, 45.4% of all properties sold in New South Wales cost less than $650,000, and 58% had a price tag of $800,000 or less. Directly in the Sydney metropolitan area, however, only 25.8% of homes sold this year fell under $650,000.
Other changes were also announced, with the $5,000 new home grant for investors to be totally scrapped, as well as the ability for investors to defer the payment of their stamp duty for 12 months.
The removal of stamp duty charged on lenders mortgage insurance, which is an additional fee for smaller deposit purchases was also implemented.
To help pay for this new package, the stamp duty surcharge for foreign investors will double to 8 percent and the land tax surcharge will be lifted from 0.75 percent to 2 percent. This also goes hand in hand with the normal transfer duty of up to 7%, meaning that a foreign investor may end up paying close to 15 percent of the total purchase price for the most expensive properties.
This is expected to help offset nearly the entire $1.2 billion dollar package.
"We know there isn't a single solution; we know this is a complex challenge," she said. "We know how hard it is to save up for your first home, especially in greater Sydney and some regional areas."
If you or someone you know is looking to purchase a property in New South Wales, contact one of our friendly staff on 1300 657 546 to discuss how a pre purchase building inspection is going to help protect yourself.