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Which state is the best to be a first home buyer?

Published on 16th March by Fiona Bennett

Which state is the best to be a first home buyer?

At some stage of our lives we will all be a first home buyer; however, in order to receive the First Home Owner Grant, buyers need to purchase a property that is brand new, such as one built off the plan or newly completed. So, which state is the best state to live in to get the greatest benefits and give first home buyers the best chance of owning their own home?

We take a closer look at the three eastern seaboard states of NSW, VIC and QLD to find out more.

First Home Owner Grant Comparison
  NSW VIC QLD
How much is the First Home Owner Grant? $10,000 Grant $10,000 or $20,000 for first home buyers in Regional VIC (1 July 2017 - 30 June 2020)

 

$20,000 until 30 June 2017, then back to $15,000                                        

What is the purchase value cap? $750,000 $750,000 $750,000
How long do you need to live in the home to receive the grant? 6 months continuously 12 months continuously 6 months continuously
Is there a duty exemption on new homes? Yes - exemptions from transfer duty on new homes valued up to 550,000. Concessions for new homes between $550,000 and $650,000. First-home buyer duty reduction valued up to $600,000. From 1 July 2017, first home buyers exempt from stamp duty on properties valued up to $600,000. First home concession on homes valued less than $550,000.
What is the median dwelling price? $795,000 (Sydney) $610,000 (Melbourne) $485,000 (Brisbane)


NSW

New South Wales (NSW) is home to some of the country’s most expensive properties and Sydney is Australia’s most expensive capital city to buy a property right now. According to CoreLogic, the median dwelling price in Sydney at the end of February 2017 was a whopping $795,000.

For first home buyers trying to get a foothold on the NSW property ladder and buy their first home, then a property purchase is becoming a real struggle. First home buyers can only receive the First Home Owner Grant on new property purchases such as newly completed or off the plan properties and not on an established home. However, with the purchase value capped at $750,000 to be eligible for the grant, it is now becoming increasingly harder to find a new property under $750,000 in Sydney, especially when the median dwelling price now stands at $795,000. And if you do manage to find a property under this threshold, $10,000 isn’t that much money in the grand scheme of things.

First home buyers in NSW are also exempt from transfer duty on new homes valued up to $550,000, whilst there are also concessions for new homes between $550,000 and $650,000. However, as just mentioned, finding a home under $550,000 in Sydney is now like finding a needle in a haystack and for many NSW first home buyers, taking up this transfer duty exemption or concession will be less likely.

There are a handful of suburbs that you can purchase property for less than $550,000 to receive the full exemptions, but you need to be prepared to look further out of the Sydney CBD and head west, south and north for more affordable options. iBuyNew can point you in the right direction for this.

VIC

First home buyers in Victoria are slightly better off with recent news that first home buyers in Regional Victoria will soon be able to take advantage of the First Home Owner Grant doubling from $10,000 to $20,000. This grant will be effective from 1 July 2017 until 30 June 2020 and will be capped at $750,000. However, the median dwelling price in Melbourne is more affordable compared to Sydney sitting at $610,000, making a first home purchase more promising. First home buyers in Melbourne will still receive the $10,000 first home owner grant; however, from 1 July 2017, all first home buyers will be exempt from stamp duty on new and established properties valued up to $600,000, saving as much as $15,000.

First home buyers will need to live in this property as their Primary Place of Residence (PPR) for a minimum of 12 months in order to be eligible, whilst for NSW and QLD this is just six months.

QLD

If you’re a first home buyer in Queensland, then you might be the best off out of all three states. Not only can first home buyers in Queensland receive a $20,000 First Home Owner Grant when buying a brand new property, but property prices here are the most affordable. According to CoreLogic, the median dwelling price in Brisbane sits at $485,000, well below the $750,000 property purchase cap. A $20,000 grant is roughly half the 10 per cent deposit you require when buying a property off the plan. However, like Sydney, you need to live in the property for six months continuously to be eligible.

You can also benefit from the first home concession on properties valued at $550,000 or less. It’s worth noting though that from 1 July 2017, the First Home Owner Grant will drop back down to $15,000, so if you are debating about buying a property in Queensland using the grant, then you need to act quickly as there are only three months left to do so before this reduces.

What can Sydney first home buyers do?

If you’re a first home buyer in Sydney or even in Melbourne struggling to buy your first home, then you might need to change tactics and think about an investment property instead. If you are unable to move interstate, but you still want the security of owning your own property, then the next best option besides asking your parents for help is to invest first, and become a first home owner later.

In Sydney, the First Home Owner Grant is not significant enough to worry about going after, especially as property prices are sky high. It’s much more beneficial to turn your attention to buying property interstate, such as in Brisbane where the median dwelling price is $485,000 and much more affordable. In fact, you could buy two properties in Brisbane for the cost of one property in Sydney.

Get in touch

To find out more about buying a property as a first home buyer and whether you should be buying as a first home buyer first or initially invest interstate and buy your first home to live in later, it’s worthwhile speaking to a Property Consultant at iBuyNew. Our Property Consultants have years of experience within the property market and can expertly guide you through the buying process and show you the best strategy to suit you.

Call the iBuyNew team today on 1300 123 463 to learn more.

Fiona Bennett

Fiona loves to keep our clients engaged and up to date with the latest property news and trends and regularly provides updates through our social media channels.

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