First time buyers in New South Wales are set to swarm the property market in a bid to beat the state government’s newly announced stamp duty concession cut-off date.
In his first state budget this week, premier Barry O’Farrell announced that as of January 1, 2012, first home buyers will no longer be eligible for stamp duty concessions on established homes.
Instead, first home buyer exemptions will only apply to newly built and off the plan properties only.
The announcement is a blow for many aspiring property buyers and will make ownership impossible for many, according to Real Estate Institute of NSW president Wayne Stewart.
“Unfortunately for some, the dream of homeownership will now become simply unachievable.
APM senior economist Andrew Wilson said he expected the announcement to trigger increased activity among first time buyers in the lead up to Christmas, not too dissimilar to the federal government’s First Home Owner Grant Boost.
“I don’t think the numbers will be as great but certainly it’s something that could drive increased activity in the market place over spring and into Xmas,” he told Smart Property Investment.
With the majority of first time buyers having moved to the sidelines of the property market for a good 12 months or more, Dr Wilson said there would be plenty of pent up demand among aspiring buyers.
While Dr Wilson said he understood the government’s reasoning behind the change, in terms of supporting new housing, he said the removal of such concessions would be a blow to first time buyers in the shorter term.
“We develop, over time, these incentives for first home buyers, because we want to keep the housing market accessible and over time they become a little bit of a crutch… a part of the buying capacity of buyers.
“When you take them away of course, it can have very significant implications,” he said.
“It’s all very good to say – and it’s true, we’ve seen that – a lot of these concessions or grants just go straight on top of a house [price], but that’s in general terms. In the short term, first home buyers will have less capacity to buy, on January 1 than they will on December 31st. They’ll be up to $18,000 worse off.”