Recently, the NSW Government made the decision to get rid of stamp duty for first home buyers. This massive win for first-time buyers is a part of Premier Gladys Berejiklian’s housing affordability package, designed to make it easier to break into the notoriously difficult NSW property market.
But what does this mean for you?
$20k-plus discount on stamp duty
From July 1 this year, first homebuyers will be exempt from paying stamp duty on both new and existing properties, as long as the property costs less than $650,000.
On a $600,000 property, this amounts to a saving of more than $22,000 – so this announcement is undoubtedly going to get more people into their own home.
For properties that are worth between $650,000 and $800,000, the required stamp duty payment for buyers will be discounted considerably.
On top of stamp duty discounts, the 9 per cent stamp duty that is charged on lenders’ mortgage insurance (a common requirement for first homebuyers, as it’s payable on any loan with a deposit of less than 20 percent) will be removed.
Theoretically, these changes should help first homebuyers to not only find it easier to afford their homes, but allow them to compete with investors, thanks to the scrapping of stamp duty concessions for investment properties bought off-the-plan.
Investors are also no longer able to defer the payment of their stamp duty for 12 months, as was previously allowed, and changes were made to the criteria for the first home owners grant. Those who are planning to build their first home are still able to receive the $10,000 FHOG grant, subject to new criteria, and the eligibility cap has been lowered from $750,000 to $600,000, though it must not exceed $750k.
Reforms such as these should make it easier for first home owners to get into the property market. The package aims to increase housing supply and accelerate infrastructure in order to support the growing communities and ease the demand for property. However, the measures have still received some reservations and criticisms.
While it will make saving up for your first home seem like a much more attainable goal, there are some potential negative impacts that these changes could bring. For instance, one concern is that cutting stamp duty for first homebuyers will simply drive demand, which will push the property prices even higher, while also inciting fierce competition.
However, CEO of VIEW.com.au Enzo Raimondo disagrees with this common commentary.
“Abolishing stamp duty may result in a somewhat higher demand for property, but this does not necessarily mean all house prices will increase,” he says.
“What it will do is assist home buyers who are a year away from saving the required deposit reach their goal now, and those who were a few years away are now much closer to purchasing their first home.
These new changes may just level the play field for first home buyers and save them up to $25,000, with the entire package adding up to almost $34,000 of potential savings. Saving up for your first home can be hard in the current property market, but with these new measures, perhaps we can start to feel cautiously optimistic!