This article is from the Australian Property Journal archive
FIRST homebuyers in NSW purchasing a new house are the winners in the 2014-15 Budget, while foreign investors would no longer be eligible for a grant.
In response to the strong house prices growth in Sydney, NSW treasurer Andrew Constance announced that from July 01, the government has raised threshold for first homebuyers eligible for the First Home Owners Grant (FHOG) by $100,000 to $750,000, when purchasing a new house.
The announcement was welcomed by the industry because first homebuyer activity in NSW is at record lows. Last month, mortgage broker AFG found first homebuyers, as a proportion of all borrowers, represented only 3% in NSW, whereas investors accounted for 47%.
“It goes without saying the Aussie aspiration of owning a home can be a nightmare. The property ladder is often out of reach. But today I can confirm we’re attempting to provide a leg up,” the treasurer said.
“But that’s not our only strategy to make owning a home easier. In this budget, we’re providing more than $60 million to local government to deliver essential infrastructure to support new housing development.
“It means more available land. It means more affordable housing. It means accelerating the NSW housing sector,” Constance said.
“Housing approvals are at the highest levels in over a decade,” he continued.
At the same time, the treasurer announced that from July 01, foreign homebuyers would no longer be eligible for the FHOG, worth $5,000.
“NSW is doing everything possible to give confidence to foreign investment in our state. However, it is not appropriate that NSW taxpayers continue to subsidise foreign investors. For this reason, from July 1, the New Home Owners Grant will only benefit Australian citizens and permanent residents,” Constance said.
The REINSW’s president Malcolm Gunning said the government’s decision not reintroduce the FHOG for existing properties has failed first homebuyers.
“The treasurer and premier are out of touch with the wills and desires of first homebuyers. Providing incentives to first homebuyers of existing properties provides a more affordable entry point where they can add value,”
From July 1, the grant will also be restricted to one grant per person, per year.
“We applaud the move to restrict the New Home Grants to Australian citizens and the closing of the loophole which saw multiple applications for grants,” Gunning said.
The Property Council’s NSW executive director Glenn Byres welcomed the government’s commitment to abolition of the remaining nuisance taxes like mortgage duty in 2016.
“Though we hope this is signed, sealed and delivered once and for all.
“We will watch to see if there is any effect of new constraints around the New Home Grant,” he added.
Byres said the budget is built on the back of a rising housing construction market.
“Surging stamp duty revenues have given NSW the freedom to invest in new infrastructure that will improve the productivity, mobility and sustainable growth of our cities and regions.
“Rising stamp duties – from both the residential property market and commercial property transfers – underpin the budget. It emphasises the critical significance of the property industry – which creates one in 10 jobs in NSW and pays over $16 billion in wages to workers and their families,” he added.
Byres said the NSW government, like other states, are growing more dependent on the property market.
“The other fundamental lesson from the Budget is that NSW is currently enjoying the upside of rising property markets through surging stamp duty revenue.
“But like all state budgets, it is exposed to any downturn – with 24% of all state tax revenue coming via transfer duty.
“It reinforces the case for a fundamental overhaul of taxation and we hope a mature debate follows about all options. Continued dependence on property taxes is not sustainable long-term,” Byres warned.
The REINSW is calling for a review of transfer duty rates.
“The government had expected duty on residential property market transfers to increase by 20.5%. Revenue from residential property market transfers is now estimated to have increased by $938 million, or 35% to $5,898,000 compared to the original budget estimate in 2013-14.
“Almost $1 billion of extra funding has come out of the property market. It is time to review stamp duty rates for the first time in 40 years and give the extra incentives to first homebuyers and older Australians,” Gunning said.
Property Review
