NSW Home-Buyer Reforms Will Impact Established Housing Market & Real Estate Activity In Port Stephens

NSW doubles its first-home grant for new homes, at the expense of the established housing market

The NSW government has ramped up its generous handouts for first-time buyers buying new homes, as the NSW Treasurer Mike Baird aims his second budget at kick-starting the state’s lacklustre home building industry.

But it comes at the expense of buyers of existing homes, who will lose thousands of dollars in incentives from October 1 this year.

From October, a first-home buyer who purchases a $550,000 new home will get $35,240 in assistance. But if it is not new, the first-home buyers will secure nothing.

First-home buyers of existing properties, about 90% of the market segment, will receive no government assistance with major ramifications for estate agents who sell existing properties in this market.

Property investors can also expect land tax bill increases in the next year. Land tax revenue is forecast to grow by 8.1%.

First-home buyers will receive up to $35,240 in government handouts when purchasing a new home from October 1, for a 15 month period before its drops back.

But the longstanding $7,000 first-home owners' grant, negotiated with the federal government when the GST was introduced in 2000, will no longer be given to buyers of existing homes, replaced by a scheme that gives $5000 for only new homes.

The $600,000 threshold for new home concession has been lifted to $650,000, Baird said as part of the 2012 state budget.

Baird said for first-home buyers of new homes, the scheme was "the most generous scheme in Australia," although the Daily Telegraph report the stamp duty changes will be revenue neutral, while aiming to boost housing supply.

"Think new," was the response of the Treasurer when asked what he would say to those who could soon miss out on any government assistance.

"This is a fantastic day for you - there is an opportunity to get into a housing market like never before," he told the post-budget press conference.

"The generosity we're providing in terms of the first home buyers grant together with the stamp duty concessions, says to the first home buyers 'Think new'," 7 News reported.

New Home Grant Scheme

From July 1, 2012, a new $5,000 grant will be provided to buyers of new homes, whether off the plan or newly built, with a value up to $650,000 and to buyers of vacant land that is intended to be the site of a new home valued up to $450,000.

The grant is targeted at all non-first home buyers and is available to investors as well as owner-occupiers. The grant will be administered through the transfer duty payment process.

The relevant form and factsheet will be made available prior to the commencement of the grant.

First Home Owner Grant (New Home) Scheme

From October 1, 2012, the first-home owner grant scheme will be replaced by the first home owner grant (new home) scheme. The new scheme will only apply to first home owners who purchase or build a new home valued at up to $650,000.

The grant will increase from $7,000 to $15,000 from October 1, 2012 to December 31, 2013 and to $10,000 from January 1, 2014.

First Home – New Home

From July 1 2012:

• the transfer duty exemption cap on new homes increases to $550,000 with duty concessions for new homes valued between $550,000 and $650,000
• the transfer duty exemption cap on vacant land increases to $350,000 with duty concessions for vacant land valued between $350,000 and $450,000

By Jonathan Chancellor at propertyobserver.com.au

 Tuesday, 12 June 2012