In his government’s latest move, Premier Daniel Andrews announced on Sunday that first-home buyers in Victoria would be exempt from paying stamp duty on properties under $600,000. These exemptions would benefit 25,000 first-home buyers, who’d save up to $15,000 (or an average of $8,000) on new purchases.
Tax discounts would also be applied on new and existing homes worth between $600,000 and $750,000 from 1 July.
In related news, the Andrews Labor government is exploring other means of helping first-home buyers, including test driving a new co-ownership scheme that would assist 400 buyers. Under this scheme, the government purchases a stake (up to 25%) in the buyers’ properties, thus reducing the deposit required by banks.
To qualify, applicants must earn $95,000 a year for couples or $75,000 a year for singles. The state plans to recoup its investments when buyers sell their properties.
“We promised we would tackle housing affordability and th at’s exactly what we are doing,” Victorian Treasurer Tim Pallas said.
John Daley, chief executive officer of non-partisan think tank Grattan Institute, said the Victorian government’s changes may help new buyers in areas where they’re competing with investors for housing stock.
“If you take places where most of the buyers are investors or second-home buyers, it will genuinely help first home buyers. It will push up the prices a little but not very much,” he said.
On the other hand, some of the measures could have unexpected consequences.
“[For] areas where most of the purchasers are first home buyers, such as the areas on the city fringes, essentially most of the benefit will be passed on to the sellers,” Daley said. “This will be a huge windfall for the large development companies who do developments on the edge of our cities.”
Though Andrews said the reforms would place downward pressure on prices by creating more housing stock, the economist Saul Eslake warned that the exact opposite would happen, with buyers having to pay more for a home following the rollout.
“This decision would be welcomed by owners and vendors of existing properties. It will allow those who have properties for sale to sell them at higher prices than they would otherwise get,” Eslake told The New Daily. “It will do nothing to assist those who want to join them as owners of one property.”
Eslake, who advocates replacing stamp duty with a broad-based land tax, warned other states and territories not to follow Victoria’s lead. “If it were adopted by other states, the result would be to enrich those who already own properties to the detriment of those who don’t,” he said.
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