Buying a first home isn’t an easy endeavour and brings with it many challenges. Saving a deposit is the main impediment, followed by stamp duty costs and in more recent times the threat posed by foreign buyers, rising house prices and ongoing regulatory changes impacting credit policies – with many often relying on parent-gifted funds, an inheritance or family pledge loans to fund their way into the market.

While the pace of capital gains has shown some signs of slowing, housing market conditions in Sydney and Melbourne have been the hottest for some period. Here we focus on recent NSW and Victorian government initiatives to assist the first home buyer that kicked off on 1 July 2017.

First Home Buyer NSW government initiatives

Stamp Duty Concessions

For the first home buyer stamp duty will be scrapped on existing homes up to $650,000 and the stamp duty ‘free’ threshold will increase for new home purchases up to $650,000. For purchases above $650,000 stamp duty relief will be provided up to $800,000, however will gradually reduce between $650,000 and $800,000.

Additionally, the package provides

• A $10,000 grant for builders of new homes up to $750,000 and purchasers of new homes up to $600,000.
• The abolition of insurance duty, imposed at 9% on the premium on lenders’ mortgage insurance. This will save around $2,900 on an $800,000 property.
• Higher duties and land taxes for foreign investors.
• That investors will no longer be able to take advantage of the 12-month deferral of duty for residential off-the-plan purchases.

How much could first home buyers save?

Savings include the stamp duty exemptions; the existing first home owners grant and the impact of the LMI duty abolition.

First Home Buyer Victorian government initiatives

Stamp Duty Concessions

For the first home buyer purchasing a home with a dutiable value of not more than $600,000 stamp duty has been abolished for contracts entered into from 1 July 2017, with discounts being applied between $600,001 and $750,000.

How much could first home buyers save?

Additionally, the package provides

• For new homes, up to $750,000 in value, built in regional Victoria the First Home Owners Grant has doubled from $10,000 to $20,000. This applies to contracts signed from 1 July 2017 to 30 June 2020. The $10,000 FHOG for new homes in metropolitan Melbourne will continue to apply.
• From 1 January 2018, a new tax levied at 1% on vacant residential property encouraging owners of empty properties to sell or rent – exemptions apply for a holiday house, a deceased estate or if the owner is overseas.
• The off-the-plan duty concession will now only apply to buyers who occupy the property as their principal place of residence (PPR) for contracts entered from 1 July 2017.

Anthony Landahl | Equilibria Finance | July 2017

This is for general information purposes only and does not constitute advice. With all of these options there are a number of considerations outside the scope of what is covered in this article that you need to understand to ensure your personal circumstances are taken into consideration.