First home buyers in the Australian state of New South Wales (NSW) will soon be able to save thousands of dollars in stamp duty taxes on residential properties costing less than $800,000.
On July 27, the NSW state government announced a one-year exemption on stamp duty in a targeted effort to inject confidence into the construction industry and property market as the state scrambles to recover from the economic downturn triggered by the CCP virus pandemic.
Under the changes set to begin on Aug. 1, the threshold for stamp duty applicable to new homes for first home buyers will increase from the current $650,000 to $800,000, with the concession reducing on higher values before phasing out at $1 million.
This means first homebuyers will save $31,335 on a new home at $800,000. The stamp duty saving on a new home at $700,000 and at $900,000 will be $10,445 and $15,668 respectively.
The stamp duty threshold on vacant land will also increase from $350,000 to $400,000 and phase out at $500,000. This will save first home buyers $7,793 on a $400,000 block of land.
Premier Gladys Berejiklian expects around 6,000 first home buyers to benefit from the stamp duty changes, which would further give the construction industry extra support amidst the challenges of COVID-19.
“It will also boost housing construction across NSW and support jobs in the building industry at a time when we need them more than ever before,” she said in a joint statement (pdf) with the state treasurer, Dominic Perrottet.
Housing Industry Welcomes Outcomes
The $10,000 First Home Owner Grant will continue to be on offer for eligible applicants purchasing a new first home worth no more than $600,000, or purchasing land and building a new first home worth no more than $750,000 in total.
Eligible first home buyers will also be able to apply for a $25,000 HomeBuilder grant (pdf) to build a new home where the contract is signed before Dec. 31, 2020, and the construction commences within three months of the contract date.
Housing Industry Association (HIA) NSW welcomed the move as a positive outcome.
“Combined with the existing $10,000 first home owners grant and the $25,000 HomeBuilder grant, first home buyers in NSW should be looking to a new home as a real option to take up homeownership,” David Bare, HIA Executive Director NSW said in a statement on July 27.
He also applauded the government for listening to HIA’s calls for greater support for the home building sector which “will play a critical part of NSW’s economic recovery from COVID-19 related challenges.”
ABS data released on July 1 showed that building approvals in NSW for the May 2020 quarter declined by 11.3 percent due to the impact of COVID-19 restrictions.
In fact, the state’s construction sector had been struggling with a declining demand before COVID-19.
According to a data released by HIA in early July, home building commencement during the March 2020 quarter declined by 12.2 percent in New South Wales.
In contrast, the quarter saw a substantial lift of 63 percent in apartment building commencement activities in Western Australia due to the state’s stamp duty concession program.
HIA senior economist Geordan Murray called for other states to follow, saying: “The lift in activity in Western Australia provides a clear example of what can be achieved by governments seeking to boost economic activity.”