The NSW Government has a range of measures in place to improve housing affordability for certain classes of property purchasers. The policies take into account the difficulties first home buyers, in particular, face in entering the market along with the state’s growing population and the need to ensure new infrastructure and transport links remain close to schools, hospitals and major roads. It is really, however, the first home buyers that the Government wanted to focus on when arranging their stamp duty concessions. It is this group of people they must support as prices are forced up time and time again by other people already established in the property market.
From 1 July 2017, a range of measures were introduced to help first home buyers find their feet in the property market. The first one was the NSW First Home Buyers Assistance Scheme. Eligible first home buyers purchasing a new or existing home would be exempt from paying any transfer stamp duty for properties up to the value of $650,000. Concessions on duty would be available for eligible first home buyers purchasing new or existing homes between the value of $650,000 and $800,000.
As part of this Scheme, eligible purchasers buying a vacant block of land would also be exempt from paying any transfer stamp duty where the value of the property was less than $350,000. They will receive concessions on duty for vacant land with a market value of between $350,000 and $450,000.
Another measure introduced by the government to not only assist first home buyers but to also stimulate the construction of new dwellings is the First Home Owners Grant (New Homes) of $10,000. First home buyers who meet the relevant criteria could receive the grant to either:
Build a new home up to $750,000; or
Purchase a new property worth up to $600,000.
For a first home buyer buying an existing property with a price tag of $650,000, this could result in savings of up to $26,857!
As of 1 July 2017, insurance duty on lender’s mortgage insurance was also abolished, saving all home buyers money where they would have previously needed lender’s mortgage insurance.
First home buyers not only face tough competition from local investors, they also need to outbid foreign investors in their quest to purchase residential property. To counter this, the NSW Government determined that, as of 1 July 2017, the surcharge on stamp duty paid by foreign investors will double from 4% to 8% and the surcharge on land tax shall rise from 0.75% to 2%.
Housing affordability is a critical issue the NSW Government must keep addressing. It makes the whole process of setting foot in the property market that little bit easier for first home buyers who face an upward battle to get into the market at all.