The New South Wales’ First Home Buyer Choice could potentially create a huge advantage for the state over other states.
BuyersBuyers co-founder Pete Wargent said even if the scheme does not come into full effect until 16 January 2023, it is likely to help attract more young talent to its capital Sydney.
“New South Wales now has an advantage on other states and territories, with 6,000 first homebuyers each year likely to take advantage of the new reform, and this can help Sydney to attract the best and brightest talent from Australia and overseas going forward,” he said.
It seems the policy is already taking effect if the latest auction figures are considered. Over the past weekend, Sydney’s preliminary auction clearance rate was 69%.
Meanwhile, seven out of every ten units taken to auction this weekend in Sydney sold under the hammer, which was a stronger result than for detached homes, suggesting that the recovery is ultimately likely to be driven by the lower end of the housing market in New South Wales.
Still, Mr Wargent said the full impact of the reform will take some time to be seen.
“We expect the lower price quartile of the Sydney market to begin its recovery in the first quarter of 2023, as more buyers take advantage of the reforms from January onwards,” he said.
Mr Wargent said the rental market in Sydney continues to tighten very rapidly as immigration rebounds, which is another factor that encourages homebuying.
“That’s especially true for first homebuyers who can gain assistance with saving or coming up with the deposit from the so-termed ‘bank of mum and dad’,” he said.
“It’s worth nothing that investors may also now be targeting the Sydney market in the price points up to $1.5m, which may arbitrage away some of the benefits of the stamp duty saved by first homebuyers over the next year.”
BuyersBuyers CEO Doron Peleg said the reform would improve the efficiencies in the economy and would ultimately help smoothen the tax take through the housing market cycle.
“State governments had become somewhat addicted to stamp and transfer duties, which are pro-cyclical and inefficient taxes, inhibiting the free movement of the labour force, and making the hurdle to home ownership increasingly too high,” he said.
“Over the 2022 financial year a total of $14.5bn was collected from transfer duties, which was four times the amount from a decade earlier.”
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Photo by Tourism Australia on Canva.
