What does the NSW State Budget mean for property?
The 2017-18 New South Wales Budget has now been released, so what does it mean for property buyers looking to buy property within New South Wales?
According to the NSW Treasurer Dominic Perrottet, this is a budget for families and households, with the Housing Affordability Package bringing the great Australian dream of home ownership within closer grasp of many more people.
For many Sydney buyers, particularly owner occupiers and first home buyers, the cost of home ownership is certainly a major challenge that only a few can overcome. According to CoreLogic, the median dwelling price in Sydney at 31 May 2017 sits at a whopping $872,300, compared to Melbourne’s $665,000 median dwelling price and Brisbane’s $490,000.
So, what is the NSW Government planning on doing to help increase affordability and allow more buyers to get on Sydney’s property market? Here is what the NSW Budget 2017-18 states.
First Home Buyers
With the rising cost of housing an ongoing challenge for many buyers in NSW, the government will help to ease this burden by boosting the supply of reasonably priced housing with an additional 30,000 homes to be delivered by expanding Property Precincts and Priority Growth Areas. This will help first home buyers enter the property market sooner, as well as support growing communities and accelerate the delivery of local infrastructure.
According to NSW Treasurer Dominic Perrottet, “the biggest expense many families face – especially in Sydney – is saving a deposit for their first home.”
“This comprehensive strategy boosts supply, accelerates infrastructure and reduces upfront costs”.
Transfer Duty Abolished
From 1 July 2017, transfer duty will be abolished for first home buyers on both new and existing homes up to $650,000. There will also be a reduction in transfer duty on properties priced between $650,000 and $800,000.
First Home Buyer Grant
First home buyers will still be eligible for $10,000 grants for new homes up to $600,000. For those who prefer to build their first home on vacant land, the First Home Builder grant of $10,000 will also be introduced, where the house and land component does not exceed $750,000.
New Home Grant Scheme
The New Home Grant scheme, which provides a $5,000 New Home Grant will close on 30 June 2017.
Principal Place of Residence Land Tax
The principal place of residence exemption will be extended to land used and occupied by an owner under a shared equity scheme. The exemption will apply from the 2018 tax year.
Even though the NSW Budget 2017-18 provides good news for first home buyers, the news isn’t as rosy for investors. From 1 July 2017, it will become slightly tougher to invest in property in NSW, in a bid to make it easier for first home buyers and owner occupiers to enter the property market.
Stamp Duty required within 3 months for investors
Under the 2017-18 NSW Budget, property investors will now be required to pay stamp duty within 3 months from the date of the contract when buying new apartments off the plan. This change comes into effect from 1 July 2017.
Currently, any off the plan property buyer can delay the duty payment by up to 12 months. This benefits those who might not have their full deposit yet or anyone who still has money tied up in other investments which they cannot reach straight away. However, the new rules will only allow home buyers including first home buyers to defer this duty payment.
Foreign investors who plan to invest in NSW property also face challenges under the NSW Budget 2017-18 where they will face hefty surcharges. The NSW government has doubled the foreign investor transfer duty surcharge to 8 per cent whilst also increasing the land tax surcharge from 0.75 per cent to 2 per cent. This move is expected to help local buyers get a foot into the already heated property market.
Insurance Duty on Lenders Mortgage Insurance (LMI)
Insurance duty on lenders’ mortgage insurance will also be abolished from 1 July 2017. This means that an insurer who issues a LMI policy will no longer need to pay duty on this premium on a NSW property.
7 Reasons to buy property in NSW
So, with changes to stamp duty in NSW, making it easier for first home buyers to enter the property market and harder for investors, why is buying a property in NSW still a good idea? Here are 7 good reasons to consider.
1. Strong economy
The NSW economy remains strong and is outpacing other states and enjoyed a 3.5 per cent economic growth during 2015-16. Business investment, public infrastructure and dwelling construction are all showing signs of strength and increasing both employment and construction activity. NSW also remains a popular tourist desgination where 3.1 million international short-term visitors travelled here in the 12 months to November 2016. The Government has also committed $72.7 billion over the next four years to infrastructure investments and help improve roads and transport.
2. Booming housing construction
In the 12 months to April 2017, there have been 72,800 building approvals in NSW, and annual housing approvals have now exceeded 50,000 a year for more than three years.
3. Low unemployment levels
Since April 2011, NSW employment has increased by 369,600 – more than any other state and accounts for almost 40 per cent of the national increase over this period. NSW has also recorded the lowest unemployment among the states for the past two years, trending at around 5 per cent.
4. Strong population growth
The population growth in NSW, particularly Sydney remains strong and Sydney is still Australia’s largest capital city, with over 5 million people.
5. World-class healthcare and hospitals
Under the NSW 2017-18 Budget, the Government will invest an additional $2.8 billion over four years in new and upgraded hospitals bringing the total investment to a record $7.7 billion over four years.
6. Quality education
Children will also receive a high-quality education in NSW, where the 2017-18 Budget has committed $4.2 billion over four years for new schools and upgrades.
7. Growing business confidence
Business confidence in NSW is also growing and is now above the national average.
Get in touch
To find out more about the NSW State Budget 2017-18 and how it affects you buying property in New South Wales as a first home buyer, owner occupier or investor, get in touch with the iBuyNew team today. Give us a call on 1300 123 463 and speak with one of our expert Property Consultants.