The NSW Budget announced this week includes a 50% reduction in stamp duty for new homes, aimed to fuel more activity in the building sector.
It's a limited effort, however. New home buyers will be restricted to properties valued at $600,000 or less to qualify for the reduction, and the plan will run out at the end of the year.
The NSW Government budget also included a continuation of its $3,000 boost to the first homebuyers grant, extended to the end of June next year. By spending now, the government is hoping it will return its budget to surplus with the expected growth.
Real Estate Institute of New South Wales President Steve Martin welcomed the funds, but said he had wished for more.
"This initiative will help investors and home buyers, as well as creating new jobs in NSW through the construction of new properties," Martin said. "These are all good things. However, we would question why the initiative has been limited to only new properties valued at $600,000 or less."
Martin said he had hoped for an across the board cut on stamp duty for all new and existing property in both the residential and commercial sectors.
Raine & Horne CEO Angus Raine agreed that he was pleased to see some funding for the housing industry in the budget, but had hoped for a longer period past the end of the year, when the discount will be reviewed.
"Six months is just not long enough," he said.
Raine said the cut, which will provide savings of up to $11,245, would be enough to lure some new home buyers. But many homes will be out in areas with little infrastructure, where the price and space allow. That infrastructure outside of Sydey needs to improve for these areas to further grow, he said.
The latest budget tried to start answering that concern by providing a $200m interest free loan facility for councils to fund local infrastructure projects.
The stamp duty measure should also start to address the growing housing shortage in the state.
"The savings in stamp duty provides a window of opportunity for anyone looking to buy a new home, including growing families, second and third home buyers and investors," said Graham Wolfe, Housing Industry Association NSW executive director.
It applies to agreements for sale of a new home executed on or after 1 July 2009 and before 1 January 2010, or transfers of a new home with no prior contract first executed on or after 1 July 2009 and before 1 January 2010. It does not apply to the purchase of land only, but it does apply to off-the-plan purchases on units and villas.
Use this free stamp duty calculator to find out how much you might be up for paying on your property purchase.