New financial year brings mixed news for Victorian first-home buyers

It’s a case of good news and bad news for eligible Victorian first time property buyers from today.

The first-home owner grant is increasing from $7000 to $10,000 for those buying new homes, but is cut completely for buyers of existing homes.

Along with the boost to new home grants the state government will fast-track stamp duty cuts, bringing them in six months ahead of schedule.

These will increase from 30 to 40% on homes valued up to $600,000. The combination of a $10,000 First Home Owner Grant and stamp-duty cut means buyers of new home for $400,000 or less will save more than $16,500.

Treasurer Michael O'Brien forecasts the move will help create more jobs in the housing-construction sector.

"Targeting the grant to newly constructed homes - whether in regional Victoria, Melbourne's growth corridors or new CBD apartments - will stimulate the economy and create jobs in the construction sector," Mr O'Brien says.

"These measures will promote more housing construction, leading to more employment, greater housing supply and reduced residential price pressure for Victorian families."

First-home buyers looking to buy established property for, say, $450,000 will benefit only from the stamp duty concession worth $7588, which the Government says offsets the $7000 grant previously available.

Last Nevember the Real Estate Institute of Victoria chief executive Enzo Raimondo says the majority of first-home buyers would not receive the grant.

"I think that first-home buyers should be treated equally," he said.

"I understand that the Government is trying to stimulate construction but most first-home buyers buy established homes and it is unfair that they will miss out on the full savings."

“Overall, the cut is good news for those buying their first home and it will be worth an additional $2377 on a home valued at $530,000.  

‘’This will bring the total stamp duty cut on the median priced home from $4754 to $7131,” Mr Raimondo said.

But Mr O'Brien said the changes will boost construction and ease housing pressures.

"We want to see more jobs and we also want to make sure we have more housing stock to meet the needs of a growing population," he says.

Mr Raimondo says first home buyers should realise that homes bought with 60 day settlements are eligible to benefit from the lower stamp duty because they pay stamp duty on settlement – not when they sign a contract.  

“Settlement occurs on the day the balance of the purchase price is paid and the property’s title document is handed over to the buyer.’’  

“This is unlike the First Home Buyer Grant, which applies from the date the contract is signed.’’

From September 1, 2014, all first-home buyers will benefit from a 50% stamp duty concession.