The great Australian dream according to this year’s Victorian State Budget 2017-18
is slipping out of reach as a significant number of Victorians, particularly the younger generation are struggling to break into the housing market.
House prices are continuing to rise, whilst all the upfront costs required to purchase a property such as a deposit, stamp duty and legal fees, which quickly add up are deterring buyers from purchasing a property.
With the population continuing to grow, at the fastest rate in the country where 2015-16 saw the population grow at a rate of 2.1 per cent, the ability to purchase a property will become even harder.
So, what does the Victorian Government plan to do and how will first home buyers, investors and renters be affected? Here are the details from the Victorian State Budget for 2017-18
First home buyers
First home buyers in VIC are the clear winners when it comes to buying property in Victoria. The Budget for 2017-18 will include $851 million to abolish stamp duty for first home buyers valued up to $600,000, a saving of up to $31,000 and cuts to stamp duty on properties valued up to $750,000 which come into effect from 1 July 2017.
First Home Owner Grant
The First Home Owner Grant
in regional Victoria will also double from $10,000 to $20,000. The $50 million set aside for this will help support up to 6,000 first home buyers, making it easier for young people to buy and live in their local community within regional Victoria.
HomesVic Shared Equity Scheme
First home buyers will also get a helping hand through the new HomesVic shared equity scheme, which will provide up to 25 per cent equity for eligible home buyers. This is a co-purchasing program for up to 400 first home buyers who qualify for housing loans, but do not have enough deposit to buy.
It therefore makes sense for first home buyers thinking about buying property in Victoria to hold off doing so until 1 July 2017 where they will be able to save thousands on stamp duty as well as potentially receive $20,000 First Home Owner Grant when buying in regional Victoria.
For investors looking to buy property in Victoria then it’s best to act fast and purchase an investment property before 30 June 2017
for the greatest savings before the new changes come into place.
Vacant Residential Property Tax
Firstly, the Government will be introducing a Vacant Residential Property Tax from 1 January 2018
of 1 per cent of a property’s capital improved value on properties that are untenanted for six months or longer. This is expected to generate approximately $80 million in revenue for the government over the next four years. Exceptions to this include deceased estates, renovations and holiday homes. This new tax could be enforced by investors self-reporting, but checking utility usage could also be relied upon.
This Vacant Residential Property tax is thought to help encourage investors to rent out their property or sell it instead. With vacancy rates remaining tight, this suggests that many properties are currently being left empty, particularly by foreign investors.
Stamp Duty Loophole Abolished
The stamp duty loophole for spouses who transfer investment properties to each other will also be abolished from 1 July 2017. The principal place of residence will be exempt to this, as will the transfer of properties after a relationship breaks down.
Off the Plan Concessions Abolished
The off the plan concessions for investors will also be abolished from 1 July 2017. If you are an investor thinking about investing in property in Victoria then you need to buy before 30 June to ensure you are eligible for stamp duty savings – a saving of approximately $20,000, or you can opt to live in the property first and then turn it into an investment later on. Learn more about this option by speaking to one of iBuyNew’s Property Consultants.
Land Tax Changes
, land tax in VIC will also be calculated on an annual basis rather than bi-annually.
New Housing Approvals
The Government has also committed $16.4 million
to speed up the planning and approval processes to create new housing.
Renters in Victoria will also benefit from the Victorian State Budget 2017-18 by being given greater long-term security. This will be carried out through a new optional standard long-term lease agreement for landlords and tenants who wish to take on a lease of more than five years. There will also be a dedicated website to connect landlords and tenants who are looking to enter a long-term lease.
Why buy property in VIC?
So, why should you continue to buy property in VIC?
Whether you are a first home buyer, home buyer or property investor, Victoria still has some fantastic property opportunities available and there are many great reasons to buy here.
Victoria and Melbourne are home to some of the best schools and universities in the country, and draws in a large number of foreign students every year. Under the 2017-18 Budget, another $1.3 billion will be committed from the budget towards education used for the construction and upgrade of new schools, IT upgrades and to provide better facilities.
This year’s Budget will invest more than $879.5 million in a more frequent and reliable metropolitan public transport system with $62.5 million invested in more train, tram and bus services to provide greater options for commuters to keep Melbourne moving.
There will also be major work done to improve roads including the $700 million over four years for the M80 Ring Road upgrades, $300 million to build the Mordialloc Bypass and $100 million to complete planning and pre-construction for the North East Link.
Victoria’s economy continues to remain strong and is one of the strongest in Australia, where Victoria’s GSP grew by 3.3 per cent in 2015-16, compared to the Australian gross domestic product (GDP) of 2.7 per cent over the same time frame.
The budget forecasts robust economic growth to continue over the next four years, whilst the population in VIC continues to grow quickly at 2.1 per cent over 2015-16.
Victoria also continues to lead the nation in job creation, where more than 200,000 jobs (or over 250 new jobs every day) were created in VIC since 2014.
The Victorian Budget 2017-18 will continue to invest an average of $9.6 billion a year over four years in infrastructure with some of the major projects including:
498 million for new and upgraded health facilities, infrastructure and vital health equipment;
$435 million for the Gippsland Rail Upgrade;
$685 million for new schools and school upgrades
Get in touch
To learn more about how the Victorian State Budget 2017-18
affects you when buying property in Victoria, it’s best to get in touch with the iBuyNew team. Our expert Property Consultants can advise you on the best options to suit you and what property opportunities are available right now.
Get in touch by calling the team on 1300 123 463
to find out more.