The State government has announced several measures to improve housing affordability, assisting first home owners to enter the market. Measures include scrapping stamp duty for certain properties purchased by first home buyers, and increasing the taxes foreign investors in order to reduce competition (and thence prices).
A comprehensive package for first home buyers will abolish stamp duty on new and existing homes valued up to $650,000, and provide stamp duty relief for homes up to $800,000. In the Sydney market, this is of limited help for purchases in the Eastern Suburbs, but is helpful for certain property purchases in the Inner West, North Shore, and of course for properties further out such as West, North-West and South-West. It seems that this is the strategy: to encourage housing in the outer-Sydney areas and reduce demand on the Inner-City areas that have no more land available.
Stamp duty on lenders' mortgage insurance will also be abolished.
The surcharge on stamp duty for foreign buyers will double to 8%, and the surcharge on land tax will increase from 0.75% to 2%, making Australia a less attractive place for foreign purchasers to purchase in, reducing competition and potentially lowering prices for local purchasers.
The Government has also changed the foreign resident capital gains withholding (FRCGW) rate and threshold. Formerly applicable as a 10% tax on properties selling for greater than $2M, now when the
contract price is $750,000 and above, the FRCGW withholding tax rate will be 12.5%.
The government also announced measures to help first home buyers gain an advantage over investors, who the Govt (perhaps erroneously) perceives to be a source of strong competition for home owners. I do not share this view, because home owners are typically emotional buyers who are willing to pay more for the property they love, whereas investors are rational buyers who place a ceiling on the purchase price, ensuring that the property meets its purpose of providing a certain calculated return.
The Government has also outlined plans to boost housing supply and infrastructure across the greater Sydney area. Unfortunately for the people who will live thee, this also means fewer trees which provide natural beauty to the environment in which we live, as as supporting our wildlife and ecology.