Australia’s most populous state will soon scrap stamp duty for first-home buyers if they build a new house from scratch or snap up a brand new one.
From August 1, property newcomers in New South Wales who spend up to $800,000 on a house and land package will be spared having to pay $31,335 in property transfer duty.
The temporary, 12-month policy would help them buy a house at Auburn or Lakemba, in the city’s west, where mid-point prices are less than $800,000, CoreLogic data showed.
Buyers would have more choice heading further out to Guildford, where the median price is $727,000.
Real estate first-timers in Sydney wanting to avoid paying stamp duty entirely in a more upmarket suburb would have a lot more choice if they settled for a brand-new two-bedroom apartment.
The median price for a unit at Waitara, on Sydney’s Upper North Shore, stands at $654,000.
First-home buyers who spend $1million on a median-priced Sydney house don’t get a full stamp duty exemption on the usual $40,335 tax.
A real estate newbie buying a $900,000 home would get a $15,668 discount on the usual $35,835 bill while someone settling a $950,000 brand new house would get a $7,834 discount on the normal $38,085 tax.
A vacant block of land worth up to $400,000 will no longer incur $7,793 in stamp duty.
NSW Premier Gladys Berejiklian said the stamp duty exemption was designed to boost construction activity, as COVID-19 restrictions pushed Australia into a recession for the first time in 29 years.
‘Thousands of people will see their bank balances benefit from this change – it will help get more keys into more front doors of more new homes,’ she said.
‘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.’
Treasurer Dominic Perrottet said a property market boost in NSW would help the national economy.
‘When the states do well, the country does well on the back of it,’ he said.
Saranga Ranasinghe, the vice president of ratings agency Moody’s Investors Service, said the stamp duty exemption would help the likes of property developer group Stockland.
‘Stockland is the largest master planned communities builder in Australia and caters to the owner-occupier segment of the market, where around 49 per cent of sales are made to first-home buyers,’ he said.
‘Residential construction has been soft since peaking in June 2018, and we expect the stimulus measures to partially mitigate weakness in the single dweller segment of the residential market.’
Since July 2017, first-home buyers in NSW have been exempt from paying stamp duty for houses and apartments worth up to $650,000, regardless of whether it is brand new or existing.
Mr Perrottet has been leading a push for the federal government to either raise the Goods and Services Tax beyond the existing 10 per cent level, or broaden it to include fruit, vegetables and bread.
He wants Canberra to give the states and territories extra revenue, via the Commonwealth Grants Commission, to scrap inefficient taxes like stamp duty and payroll duty.
Both hated state taxes were meant to have been abolished in 2000 when the GST debuted but the consumption tax only replaced indirect federal wholesale sales taxes instead of state levies.
Last month, federal Treasurer Josh Frydenberg announced the $688million HomeBuilder scheme giving all home owners until December 31, regardless of whether they are first-timers, a $25,000 grant to build a home worth up to $750,000 if they lived in it.
The federal government’s $500million First Home Loan Deposit Scheme is also enabling property newcomers to secure a mortgage with a five per cent deposit as taxpayers underwrite the balance of the 20 per cent deposit.