Not much not already announced for first home buyers in NSW budget

Not much not already announced for first home buyers in NSW budget
Not much not already announced for first home buyers in NSW budget

There's not going to be much news for the first home buyers within Tuesday's NSW state government budget.

That's because the Premier Gladys Berejiklian has already announced her housing affordability package which officially starts July 1.

It was a valiant effort, but one I felt without convincing reasoning for the major policy of relief for the first home buyer.

It had the impression of the state government being seen to do something under the weight of all the recent unaffordability headlines.

The NSW Government’s solution for housing affordability sees stamp duty abolished on all houses and apartments up to $650,000 and reduced stamp duty relief for homes up to $800,000.

The valid fear is the government's well intentioned measures could prove counter-productive and lead to an increase in prices if first home buyers who hold off during June, then rush into the market in July.

Indeed the Starr Partners agency quickly noted vendors seeking to prise more of of their offerings by asking their estate agents to list their homes for slightly more, given that first home buyers will soon have more to spend. 

"When first home buyer grants were introduced a few years ago, we saw the same thing," Douglas Driscoll, the Starr Partners chief noted.

Though it's unlikely to impact too deeply in Sydney’s inner and middle-ring suburbs as just 20 per cent of detached housing stock and 33 per cent of unit stock fall within the $650,000 price threshold for stamp duty exemptions.

No suburbs within a 25km radius of the CBD have a median house price under $650,000, while just 38 have median unit prices under the figure which has not been indexed.

CoreLogic noted across in the entire Sydney metropolitan area just 25 per cent of dwelling sales over the past year were at a price of $650,000 or less.

The measure will encourage higher update of apartments given their pricing.

As Driscoll said the affordability crisis is a Sydney issue, not a state wide issue so regional NSW first home buyers are set to benefit the most from the measure.

It will take a big rise in first time buyer demand to prop up the overall housing market, filling any gap by fewer investors should they exit in the market.

There was an historic four percent low of NSW housing finance commitments to owner occupier first home buyers in recent calculations compared to 46 percent of lending to investors. 

Young first home buyers who don't wish to rush the market after July 1 will no doubt seek out the Federal Budget's simple superannuation top-up scheme that offers generous tax breaks.

The Federal Government's headline housing measure also kicks in from July 1 when the first-home buyer can start to salary sacrifice into their super account.

Withdrawals for home purchasing, taxed at marginal tax rates less a 30 percent offset, will be allowed from 1 July 2018.

This article first appeared in The Daily Telegraph.

Jonathan Chancellor

Jonathan Chancellor

Jonathan Chancellor is one of Australia's most respected property journalists, having been at the top of the game since the early 1980s. Jonathan co-founded the property industry website Property Observer and has written for national and international publications.

State Government Nsw Budget

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