Changes to stamp duty in New South Wales have led to an increase in owner-occupier first-home buyer finance commitments.
According to the latest housing finance data from the Australian Bureau of Statistics (ABS), there were 10,227 owner-occupier first-home buyer finance commitments in August 2017, the most since December 2009.
In July, the Berejiklian government abolished stamp duty for existing and new homes valued up to $650,000. Stamp duty on homes valued up to $800,000 were also discounted.
As a result the number of first-home buyers entering the property market in NSW grew by 59% between June and August, according to CoreLogic.
“This data highlights that stamp duty is one of the key barriers for first home buyers wanting to participate in the housing market, at least in NSW and Vic,” CoreLogic said.
Despite the surge, Cameron Kusher, head of research at CoreLogic, said the new data calls into question the sustainability of red-hot housing markets like Sydney (where the median house price in the September quarter was $1.1m, according to the Domain Group).
First-home buyers could face significant mortgage stress should interest rates go up.
On average, the mortgage repayments on a median priced property consumed nearly half of a Sydney family’s income, according to Kusher.
“The dwelling price to income ratio in Sydney now sits at 9.1 times,” he told ABC News. “Which basically means if you could save every single cent that you earned every year and you were going to buy the median priced property outright you’d be 9.1 years of your income.”
While prices in Sydney were down half a percent in October, Kusher said the movement was mostly driven by changes to the more expensive end of the market.
“In Sydney over the last three months we’ve actually seen values start to fall. If you look at that, the lower end of the market is probably going to hold up better than the higher end of the market where we are certainly seeing demand wane.”