Cuts to stamp duty in NSW came into effect at the beginning of the 2017/2018 financial year. The increased grants and concessions were designed to improve housing affordability for first time home buyers across NSW. But have they worked? Has there been more first home-buyers entering the market and is housing any more affordable? In this blog post, we give an overview of the NSW Government’s changes and explore what, if any, impact they have had on the housing market.
Stamp Duty Changes NSW: What You Need To Know
Changes to stamp duty were introduced on the 1st July, 2017. In brief, the changes are:
- No stamp duty on homes (new and existing) valued up to $650,000.
- Stamp duty discounts for homes valued up to $800,000 (use our stamp duty calculator to see fees and charges for individual property values).
- $10,000 grant available to builders of new homes up to $750,000 and purchasers of new homes up to $600,000.
- Duty on lenders’ mortgage insurance abolished.
- Investors not able to delay paying stamp duty on off-the-plan properties.
- Foreign investors to pay 8% stamp duty (increased from 4%) and 2% land tax (increased from .75%).
With these changes, first home buyers can save up to $24,740, a huge boost when also trying to save for a deposit. However, there has been some criticism of the new measures. Specifically, that the new subsidies may actually inflate house prices further.
“But I also note once again, for the record, that the government might expect to achieve much more for affordability in the longer run by spending this money in other ways, that would lead to lower cost supply of new housing.” – Former Central Bank Governor Glenn Stevens
Naturally, the government rejected this idea, but now that the changes have been in effect for nearly a year, what do the statistics show?
Is Housing Affordability Improving?
Somewhat. First, let’s look at the data from October last year. As a direct result of stamp duty changes, the number of first homebuyers entering the market in NSW was up 59 percent in the June Quarter (source). In February this year, premier, Gladys Berejiklian, announced
The data is conclusive in showing an increase in the number of first homebuyers and certainly suggests that prior to the changes, stamp duty was a barrier to those wanting to enter the property market. But what about affordability?
Obviously, house prices in Sydney are much higher than in other parts of NSW. Therefore, the stamp duty thresholds affect a smaller number of properties. CoreLogic’s latest Home Value Index report shows that house prices in Sydney have fallen, but this is mostly a result of changes in the expensive end of the market:
In other words, affordability remains an issue in large parts of Sydney. However, the fact remains that more first home buyers are able to enter the market and house prices in Sydney are starting to slow which can only be a good thing.
Atelier Wealth is an investment specialist based in Sydney. Contact us today for a transparent analysis of your borrowing capacity and honest, expert advice.