Expert, first home buyer gives their thoughts on two NSW property policies
For three years, prospective first-home buyer Vivian Tao has been searching for a property.
While the south Sydney woman has the know-how (thanks to a finance degree), savings nurtured since the age of 16 and generous parents willing to foot half of her deposit, the search has been “overwhelming” and the options limited.
She’s also been marred by a global pandemic, followed by inflation fears and rising interest rates.
However, depending on a new slate of election promises on offer for NSW first-home buyers, the Sylvania Waters resident is “definitely keen to buy” in 2023.
“The home I’m looking for is the one that I want to live in. I want to experience what it’s like to move out of home, while also having something that will appreciate over time,” she said.
“Ideally, I’d like to get something like an apartment in a good area, that’s close to the city and maybe has two bedrooms, depending on what I can afford.”
NSW Opposition Leader Chris Minns proposed a revamped First Home Buyers scheme that scraps stamp duty for first-home purchases worth up to $800,000. Properties under $1 million will also receive significant concessional rates. Currently the stamp duty free threshold is set at $650,000.
According to statistics from NSW Labor, this would allow at least 95 per cent of NSW first-home buyers to receive a reduced rate on their stamp duty.
The policy was released in response to the Coalition’s First Home Buyer Choice scheme. The plan spruiked by Premier Dominic Perrottet allows potential first homebuyers to choose between paying stamp duty or an annual property tax for listings under $1.5 million.
Government costings estimate the latter option would shave two years off the time it takes for someone to save for a home deposit.
$0 STAMP DUTY CHOICE
Based in Sydney’s Eastern Suburbs, mortgage broker and founder of CBM Mortgages Craig McDonald says there are benefits and drawbacks with each plan.
He says it boils down to two things: how far from the city you want to live and your price bracket.
Reviewing Labor’s $800,000 stamp duty free cap, he said Sydney buyers, especially those who want to live in the metro areas may be restricted by apartment dwellings and location.
But he says it’s an improvement on the “impossible” stamp duty waiver for properties under $650,000.
“You will start seeing a fair few properties falling into the new proposed bracket, especially for single first home buyers in the Sydney metro area,” says Mr McDonald.
Although the Coalition’s property tax option allows buyers the ability to waive stamp duty and pay an annual land tax of properties purchased below $1.5m, raising land values could mean that annual repayment increase.
Mr McDonald said people will need to consider whether they want to their first property purchase to be their “forever home, or a stop gap home”.
“If it’s your home for the next 10 or 20 years it could be a good option as it would avoid the need to pay the lump sum stamp duty fee.
“However if it’s your intention to convert that property to an investment property at a later date then you need to be aware that the annual fee will increase significantly.”
Mr McDonald says this is a “big risk” for a lot of his clients who buy their original property with the intention to keep their first home as an investment once they choose to upgrade.
“This happens with a lot of my clients as they purchase their first home and they know it’s not their forever home because people start having families,” he says.