If you’ve considered buying an investment property or your first home in New South Wales, it may pay to get in quickly. Real estate experts are predicting property prices within the state will rise when the state government abolishes stamp duty for first home buyers.
The NSW government will scrap stamp duty for first home buyers purchasing new and existing properties valued up to $650,000 from July 1. First home buyers will also be eligible for discounts on properties priced to $800,000. Currently the stamp duty is only waived for first home buyers purchasing new properties to the value of $550,000.
The new legislation aims to help NSW residents save nearly $25,000 on their first home. However, research firm Corelogic worries that the policy will inflate property prices within the state.
“The long-term outcome may be self-defeating due to higher demand pushing up prices,” the group’s head of research, Tim Lawless, told news.com.au.
The state government will hope doubling its Foreign Investor Surcharge Duty will reduce interest from overseas buyers and offset increased demand from first homebuyers. However, financial services firm UBS fears developers could undermine the state government’s efforts. Developers typically rely on presales to finance construction. The bulk of these presales come from foreign investors, who developers will want to entice back to the market.
Kim Wright, UBS’ global head of real estate cited the example of Hong Kong, which introduced a higher stamp duty for foreign buyers. This legislation saw foreign investments initially fall from 40 percent to 5 percent. However, this drop was short-lived.
“But then what has happened is developers provided rebates, where they would refund all or part of the stamp duty, so Chinese buying picked back up to pretty high levels,” she explained. “I think [the NSW changes] will slow down some demand, then it will depend on how the developers respond.”
If foreign investment wanes, it’s not all good news according to the Urban Development Institute of Australia. It says that if foreign investors don’t put money into local construction, whole housing projects may be cancelled. This will worsen under supply issues in boom areas like Sydney, which should also push property prices higher.
With all signs pointing to rising real estate prices in New South Wales, there’s no better time to secure an investment property. Call Chase Edwards on 1300 854 833 to assess your finances and take the first steps towards building your property portfolio.