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The NSW government’s housing affordability measures could make little difference to first home buyers in Sydney and drive up demand for property in the state, CoreLogic has warned.
A recent CoreLogic study reveals that first home buyers made up just 8 per cent of owner-occupied mortgage commitments in March 2017, a slight increase from 7.5 per cent last September.
CoreLogic’s Perceptions of Housing Affordability report found stamp duty was the largest hurdle for home buyers, with 74 per cent of those surveyed saying stamp duty reductions would improve the situation.
“Clearly, the state government is responding to one of the most significant pain points for prospective buyers,” CoreLogic head of research Tim Lawless said.
Under the changes, which come into effect on 1 July, stamp duty will be abolished for first home buyers on existing and new homes up to $650,000, and stamp duty discounts will be introduced for properties up to $800,000.
“To put these limits into context, over the past twelve months, 45.4 per cent of dwellings sold across New South Wales had a price tag of $650,000 or less and 58 per cent of dwelling sales had a price tag of $800,000 or less,” Mr Lawless said.
While the measures would benefit many first home buyers across NSW, their impact in metropolitan Sydney is less uncertain. According to CoreLogic data, the median house price in Sydney is slightly over $1 million, while the median price for units is around $743,000.
Mr Lawless also cautioned that the measures could potentially create a domino effect that raises prices, negating the stamp duty reductions.
“It’s widely accepted that policies aimed at stimulating demand tend to push prices higher, [with] a possibility that the new policy could ultimately be self-defeating, increasing housing demand which could place further upwards pressure on the price of housing,” he said.
Affordability refers to a product or service that is inexpensive and accessible for people with limited means.
Housing affordability refers to the cost of housing that is relative to the disposable income of a renter or buyer.