First-home buyers are the big winners in NSW Treasurer Dominic Perrottet’s first state budget, which was delivered on Tuesday. In a budget that the Treasurer labelled the “envy of the Western world”, housing affordability was a key issue along with health and schools.
The Treasurer said in his speech that part of the $4.3 billion housing affordability package includes strategies to boost supply, accelerate infrastructure and reduce upfront costs.
Measures announced in the budget to help first-home buyers get their foot onto the property ladder include:
- Scrapping stamp duty for first home buyers on new and existing homes up to $650,000, and reduced for properties between $650,000 and $800,000, effective from July 1. “Our cuts to transfer duty on property and insurance mean families can pick up the keys to their first home quicker than before,” Mr Perrottet said.
- First-home buyers will also be eligible for $10,000 grants for new homes up to $600,000. Insurance duty on lenders’ mortgage insurance will be abolished.
- A $10,000 First Home Builder Grant will be available for people who build their first home on vacant land, but total value of house and land cannot exceed $750,000.
The NSW Government say will spend more than $720 million over the next four years to address the key issue of housing affordability. The budget includes $117.8 million of new investment over four years to deliver infrastructure, housing and employment initiatives, review land use and infrastructure strategies for priority growth areas and implement regional plans. The budget forecasts that 75,000 new homes under construction will be completed in the next financial year.
Simplifying the planning system, fast-tracking housing approvals, and releasing and rezoning more land are all part of the plan to make housing more affordable, Minister for Planning and Housing Anthony Roberts said in a statement.
“Our number one priority as a Government is to get more houses built and to market to help make new homes more affordable,” he said.
There were no announcements made in regards to rental affordability or affordable housing in new developments for low-paid workers.
Stamp duty accounts for about 10 per cent of the state’s revenue and, despite the stamp duty discounts for first-home buyers, this will continue to grow in the coming years although at a slower rate. This financial year, the Government will likely rake in $6.8 billion in residential stamp duty revenue, up nearly 10 per cent from last year, thanks to Sydney’s booming property market.
REINSW President John Cunningham said, given the windfall collected from stamp duty, the budgeted measures are not enough again missing the opportunity to pass on the real reward the budget should have delivered all property consumers.
“A review of stamp duty brackets would assist all residents of NSW,” Mr Cunningham said.
“Instead the Government continues to gain from its failure to recognise that bracket creep is an inhibitor to supply.
“Retirees who are sitting on large family homes have been given no incentive to downsize. A simple review of bracket creep would assist them to make the decision to sell.
He said the incentive of reducing stamp duty for first home buyers should also be targeted towards older Australians.
“Helping downsizers with reduced stamp duty is one of the key ways to instantly help with the supply issue, as it creates increased market activity with no loss of revenue for the Government. In fact, it has been projected that there could be a gain in Government revenue.
“Instead, the NSW Government has given itself a pat on the back and continues to put its hand out to ordinary Australians who are trying to put a roof over their heads,” Mr Cunningham said.
With a number of measures aimed at benefitting first-home buyers, the big losers of the budget are foreign investors. Foreign buyers will be slapped with higher fees and stringent measures in an effort to make housing more affordable and accessible for those just stepping onto the property ladder.
The foreign investor surcharge will increase from 4 to 8 per cent on housing stamp duty and overseas buyers will pay a 2 per cent surcharge on land tax, up from 0.75 per cent.
Additionally from July 1
- Application fees for foreign purchases of residential properties valued at less than $10 million will increase by 10 per cent on the current fees
- Foreign owners of residential property will be hit with an annual vacancy charge on property that is not occupied or genuinely available on the rental market for at least six months each year. The charge will be equivalent to the relevant foreign investment application fee imposed on the property at the time it was bought by the foreign investor
- There is a 50 per cent cap on the total number of dwellings a developer can sell to foreign buyers. This was introduced in May
For investors wanting to buy off-the-plan properties, the concession has been tweaked to benefit first-home buyers. The concession allowed for a delay of up to 12 months in the payment of duty, but now it will be targeted to owner-occupiers only.