First it was Queenslanders who were slugged with higher stamp duty rates in August – now it’s NSW first homebuyers who are rushing to buy before new, higher stamp duty levies kick in on January 1.
From new year’s day 2012, first homebuyers in NSW will be forced to stump up thousands of extra dollars in stamp duty, prompting a rush of buyers to flood the market.
Currently, first homebuyers don’t pay any stamp duty on home purchases below $500,000 under the First Home Plus Scheme, while homes valued between $500,000 and $600,000 receive a concession. This equates to a saving of up to $17,990.
From January 1, the First Home Plus Scheme is being shelved and replaced by the First Home - New Home Scheme. Under this program, stamp duty concessions will only be available to first homebuyers who purchase a brand new home or vacant land intended to be used as the site for a first home.
This means buyers of established properties will no longer receive the stamp duty exemption or concession.
Since the news was announced a few weeks ago, mortgage broker Loan Market says 60 per cent of its brokers in NSW have reported a spike in the number of pre-approved customers finding properties.
“The increase in activity around pre-approvals is a clear indication that parts of the NSW property market are due for increased competition,” says Dean Rushton, Loan Market Chief Operating Officer.
“What we’re starting to see in the NSW market right now is a similar scenario to the end of 2009, when the government withdrew the increased First Home Owners Grant. Market demand has been pulled forward and buyers are accelerating their purchasing plans. Pre-approved customers are acting more decisively in response to the removal of a government concession that can save thousands of dollars.”
Meanwhile in Queensland, the property market was delivered a blow in the form of a stamp duty increase in August, when the state government lifted the concession on owner-occupier purchases.
Before the increase, stamp duty in Queensland on a $500,000 existing home for a principal place of residence was $8,750. As of 1 August, stamp duty on this same purchase increased to $15,525.
Along with the rest of the state, REIQ chairman Pamela Bennett was not impressed, particularly as the Queensland market has already taken a huge hit in the wake of recent natural disasters.
“The removal of the stamp duty concession for non-first home buyers wreaks havoc on the Queensland property market,” she says.
In exchange for the stamp duty cuts, the state government has offered a $10,000 one-off grant for anyone buying or building a new home, but Bennett isn’t convinced.
“I believe a better way to stimulate the economy would have been to provide financial incentives for all buyers of all types of properties – which in turn would have increased activity and therefore helped the government’s bottom line,” she says.