First home buyers benefit from NSW 2017-18 Budget
With the recent announcement of the NSW Budget last week, there are plenty of winners and losers. This year however, first home buyers are one of the winners of the 2017-18 NSW Budget, so what exactly is entailed for first home buyers?
From 1 July 2017, first home buyers will find it slightly easier to enter the property market, helped by a number of new initiatives under what is known as the housing affordability package. Under the housing affordability package, first home buyers will benefit from a number of different exemptions to help them get on the property ladder faster and one step closer to owning their first home.
One of the main hurdles that is currently stopping first home buyers as well as other owner occupiers and property investors buying property in New South Wales and Sydney particularly is down to the expensive property price tags. According to the latest CoreLogic results at 31 May 2017, the median dwelling price in Sydney currently stands at $872,300, well above Melbourne’s median dwelling price of $665,000 and almost double Brisbane’s median dwelling price of $490,000.
In order to bring property prices down, greater construction of homes is believed to be the answer. It is expected that within the next financial year, approximately 75,000 homes currently under construction will be completed, which is double the long-term average of 40,000 according to Treasurer, Dominic Perrottet.
The planning Minister, Anthony Roberts, stated the government’s “number one priority” was to ensure more homes are built to make new homes much more affordable.
"We are working on many fronts to make owning a home a reality for more people, by streamlining and simplifying the planning system so housing approvals can be fast-tracked and are continuing to release and rezone more land," Mr Roberts said.
So, what exemptions are now included under the housing affordability package for first home buyers? The main two include stamp duty savings and the first home owner grant for house and land purchases.
Stamp Duty Savings
From 1 July 2017, first home buyers will no longer have to pay stamp duty on homes up to $650,000. For properties valued between $650,000 and $800,000, there will be a reduction in stamp duty. Stamp duty savings will be for both new and existing homes. Currently, first home buyers purchasing a $600,000 property for example would still need to pay $12,370 in stamp duty, but from 1 July 2017, this cost would be waived.
First Home Buyer Grant
The first home buyer grant of $10,000 will still be available for new homes up to $600,000. However, if you are building a house, then you too can benefit from a $10,000 grant, as long as the total value of the house and land does not exceed $750,000.
Principal Place of Residence Land Tax
From the 2018 tax year, the principal place of residence exemption will be extended to land used and occupied by an owner under a shared equity scheme.
Insurance Duty on Lenders' Mortgage Insurance Abolished
First home buyers can also benefit from the abolishment of insurance duty on lenders' mortgage insurance, taking place from 1 July 2017. For example, a home valued at $800,000, and a buyer with a deposit of $50,000 who requires lenders' mortgage insurance, could save approximately $2,900.
Tighter Lending Restrictions for Investors
With more restrictions for property investors in place, particularly tighter lending restrictions, it is expected that there will be less investor activity in the NSW property market, making it easier for first home buyers to enter the market with less competition to go up against. The requirement for stamp duty within three months from the date of the contract from investors is also likely to deter investors in NSW, where currently they can deter their duty payment by up to 12 months, benefiting those who might not have their full deposit ready, or have money tied up in other investments which they cannot reach.
Surcharge on stamp duty has also doubled for investors from 4 per cent to 8 per cent whilst the surcharge on land tax has risen from 0.75 per cent to 2 per cent.
With first home buyer activity reaching a new record low of 7.5 per cent of new owner occupier mortgages last September according to ABS statistics and increasing only marginally to 8 per cent in March 2017, there’s still a long way to go to reach the long-term average of 17 per cent. These new exemptions tailored for first home buyers could help some buyers across the line.
Get in touch
If you are a first home buyer looking to enter the NSW property market, then we have a great range of new apartments and house and land packages for sale. Browse through our range of new apartments starting from around $450,000 for a one bedroom apartment.
To find out more about how you can enter the property market as a first home buyer and how much you can save in the process, get in touch with the talented iBuyNew team who can assist you with any questions you might have.
Call one of our friendly Property Consultants today on 1300 123 463 to discover more about the NSW Budget 2017-18 for first home buyers.