A New South Wales Government stamp duty freeze will help first home buyers gain a crampon in the market, and support the building industry during these unprecedented times.
The year-long initiative will benefit “thousands of people” and “get more keys into more front doors of more new homes,” NSW Premier Gladys Berejiklian told media.
Starting on the 1st of August 2020 and running for 12 months, the threshold for having to pay stamp duty on new homes for first home buyers will jump from the current $650,000 to $800,000 with the concession reducing on higher values before phasing out at $1 million.
“The stamp duty threshold on vacant land will also rise from $350,000 to $400,000 and will phase out at $500,000,” McGrath reports.
“The changes to the threshold will only apply to newly built homes (houses and apartments) and vacant land, not to existing homes,” (McGrath).
Edward Brown, director at Australia’s leading real estate provider Belle Property and one of Sydney’s Eastern Suburbs’ leading real estate agents told DMARGE there are plenty of homes that meet this criteria in NSW.
Specifically, when it comes to Sydney, he said there would be opportunities for first home buyers to take advantage of the stamp duty freeze in places like Alexandria and Western Sydney.
“It will make buying a fist home more achievable.”
The government expects 6000 first homebuyers to benefit from these changes and will save them up to $31,335 on a new $800,000 home.
As The Australian reports, this comes amid a first home buyers’ loan scramble, inspired by various other state and federal government stimuli.
These incentives are threefold – and broken down perfectly in a recent article by McGrath.
First Home Buyers Grants
The NSW Government already had a scheme in place (which will continue per usual) offering a $10,000 first homeowner grant, which is available to people buying a new first home worth no more than $600,000 or buying land and building a new first home worth no more than $750,000 in total.
“This means the maximum benefit a homeowner could be entitled to is $32,335 if purchasing a new home and accessing the grant,” (McGrath).
“In June 2020, the Federal Government announced a new HomeBuilder scheme which can help add even more money to first home buyer budgets,” McGrath. “This initiative is designed to boost the construction sector, but has the added benefit of supporting first home buyers who are looking to build a new home.”
“Historically, the first home buyer grants have proven to be a successful driver of demand and now with the ability to combine it with the HomeBuilder scheme, we anticipate first home buyers, who have stable employment, will continue to drive demand between now and the end of the year.”
First Home Loan Deposit Scheme second intake
“This is an Australian government funded initiative which partially guarantees some low deposit loans by helping eligible first home buyers avoid paying lenders mortgage insurance,” McGrath explains.
“If a first-time buyer has less than 20% deposit, they will normally be required to pay lenders mortgage insurance which can be quite hefty. However, under this scheme, eligible first home buyers can purchase a modest home, with a deposit as little as 5% (lenders criteria applies) and the Commonwealth Government will guarantee the difference between what the first home buyer has saved and the 20% deposit threshold lenders usually require before they’ll provide a loan without lenders mortgage insurance.”
“The government says this could save first home buyers as much as $10,000.”
Also important to note is that the property price threshold varies depending on where you are buying.
Happy house hunting!