The NSW Government recently revealed a new housing affordability package in an effort to assist first home buyers entering the market. Central to the new policy are a number of changes to the first home buyer stamp duty concession and grant schemes.

The changes, which will come into effect on 1 July 2017, will offer eligible first home buyers savings of up to $34,361 for a new home purchased for $600,000.

First Home Owner Grant (New Homes) Scheme

First home buyers who build a new property worth up to $750,000 will be eligible to receive a $10,000 grant.

First home buyers who purchase a new property worth up to $600,000 will be eligible to receive a $10,000 grant.

This scheme will replace the $5,000 New Home Grant which was previously available to all buyers of newly constructed or substantially renovated homes.

Stamp duty concessions

First home buyers purchasing a home up to $650,000 will not pay any duty on their purchase. In a welcome relief to first home owners, this concession will apply to the purchase of both new and existing homes.

Properties valued between $650,000 and $800,000 will have their duty discounted on a sliding scale whilst duty concession for first home buyers purchasing a vacant block of land remains unchanged, with no duty payable on vacant blocks of up to $350,000.

Good news for first home owners having to rely on mortgage lenders’ insurance, with the package abolishing the duty all together.

Increased housing affordability or political power play?

With the introduction of the Government’s proposed housing affordability package, the NSW Government hopes that first home buyers will be able to compete with foreign buyers in the increasingly tight Australian property market. To further address this competition, the Government has introduced additional measures with the package that include:

  • an increase in foreign investor purchaser taxes;
  • restrictions on the proportion of foreign sales permitted by developers; and
  • $3 billion infrastructure funding to boost housing supply.

While the stamp duty concessions threshold has only been raised marginally, the most notable change is the stamp duty concessions, which will now be available on existing property purchases in addition to new built properties.

Although widely praised by the media as a positive step forward in the quest for housing affordability, it remains to be seen whether these reforms are enough in the current market. Critics have argued that the thresholds should have been raised further, with median house prices in most capital cities and metropolitan areas tipping well beyond the $650,000 stamp duty concession threshold.

Changes at a glance

Click here to view the table. 

An example of the total savings available for first home buyers:

Click here to view the table. 

*Includes lenders mortgage insurance duty based on a mortgage with a $50,000 deposit.