NSW to scrap full first home stamp duty concessions for existing homes from 2012
First-home buyers will no longer have their stamp duty fully subsidised by the state government unless they buy newly constructed homes.
Hitherto hesitant first-home buyers are set to boost the spring buying season, snapping up established house and units before the January 1 introduction.
The shock measure was unveiled by Treasurer Mike Baird in the Coalition's first budget in office.
"We recognise this is a difficult decision, but we believe it is necessary to make buying a new house relatively more attractive than buying an existing dwelling for first-home buyers," Baird says.
"The government has therefore decided that from January 1 next year, while all eligible first home buyers will continue to receive the $7,000 first-home owner's grant, eligibility for additional stamp duty concessions will be limited to those purchasing newly constructed homes, including 'off the plan'," the Treasurer says.
"We will continue to closely monitor housing sector conditions and will work closely with the sector to develop further options to encourage growth."
Some first-home buyers will lose up to $17,990 exemption.
The Daily Telegraph's Andrew Clennell reports that in the budget briefing, Baird predicted the housing market would spike up until January 1 as a result of the change and claimed that after January 1 more much-needed new homes would be built.
First-home benefits of up to $24,990 have been available, including the $7,000 First Home Owner Grant and a duty exemption of up to $17,990 under the First Home Plus Scheme.
The $7,000 first-home buyer grant will continue to be available to all eligible first-home buyers.
Baird says stamp duty concessions need to be directed to stimulate the struggling construction sector.
"With new housing at historically weak levels, and a weak fiscal position, we need to target our assistance to home buyers to where it is most needed in the economy," he says.
The revised First Home Plus and First Home Plus One schemes will provide full transfer duty exemptions for eligible first-home buyers purchasing a newly built home costing up to $500,000 and partial transfer duty exemptions for homes costing between $500,000 and $600,000.
Baird's first budget, released today, was a mix of cuts and new spending, with a $718 million budget deficit forecast for 2011-12, although the bottom line is a return to surplus in the next three years through savings measures.
The Urban Taskforce has welcomed the NSW Government's decision to limit first-home buyers' stamp duty concessions to newly built homes.
The Taskforce's chief executive, Aaron Gadiel, says the $1 billion revenue measure is a sensible step that would help boost NSW's supply of new housing.
"This reform will remove the current scheme's inflationary impact on home prices, and will make more housing available to more people," Gadiel says.
"This is good public policy."
Gadiel says the existing first-home buyers' stamp duty concessions have been poorly targeted for far too long.
"NSW's housing supply has been heavily constrained by the planning system and high development levies," he says.
"By tying stamp duty concessions exclusively to new housing, the inflationary impact on existing housing will be removed, and brand-new homes will be more attractive to home buyers."
This article first appeared on Property Observer.