NSW government needs to make first home buyers assistance effective: David Bare

NSW First Home Buyer (FHB) assistance measures have not kept pace with the market.

First home buyers represent only 8 percent of owner- occupier home loans in NSW, compared to 15 percent in Victoria and 16 percent in Queensland.

The overall package for first home buyers in NSW has had a consistent and critical flaw for some time. That is that the stamp duty exemptions for FHB’s (via the First Home - New Home package) have not worked in tandem with the First Home Owners Grant.

A full stamp duty exemption should be offered for new properties up to the same monetary cap as the First Home Owners Grant of $750,000 and on vacant land up to $450,000. Currently, a full stamp duty exemption is only available on new properties up to $550,000 and vacant land up to $ 350,000.

I doubt any first home buyers are able to meet the criteria for a stamp duty concession virtually anywhere in Sydney. The stamp duty price caps were put in place in 2012 and prices in Sydney have increased by more than 50 percent in that time.

This is way out of touch with the reality of today’s market.

The overall support to first home buyers would be far more successful if these simple changes were made as soon as possible.

First Home Buyers in NSW are struggling to get a foothold in the market and reinstating the $15,000 grant for new dwellings up to $750,000 and providing a stamp duty exemption to the same amount could provide a saving of up to $34,000 up front.

Whilst longer term structural change is needed to deal with inefficient taxes like stamp duty, such change is unlikely to come anytime soon. That’s why we need to support those struggling to enter the market in the near to medium term.

David Bare is HIA executive director, NSW, and can be contacted here.