First home buyers in NSW should find it easier to get their foot in the property market door, after a raft of changes were recently announced by the State and Federal Governments.

The series of exemptions and incentives relate to superannuation access, stamp duty, lenders insurance and grant entitlements. They have been devised to make buying a first home more affordable, create new housing, and look set to spur a buying spree.

The New South Wales government changes have already taken effect, while Federal Government changes come into force in July 2018.

So let’s take a look at what’s on offer for people looking to buy their first home…

Snapshot

$600,000 existing property – $24,361 in potential savings (no stamp duty of $22,490, no lenders mortgage insurance duty of $1871)

$600,000 new property – $34,361 in potential savings (no stamp duty of $22,490, no lenders mortgage insurance duty of $1871, plus a new home grant of $10,000)

Stamp duty out

For first home buyers in New South Wales stamp duty has been abolished on new or existing houses valued at up to $650,000. This offers a potential saving of up to $24,740.

Meanwhile stamp duty on properties worth between $650,000 and $800,000 will gradually be reduced.

Lenders mortgage insurance duty gone

The New South Wales government has also moved to reduce the costs of borrowing, removing the 9% duty on lenders mortgage insurance. This means a home buyer could save up to $2900 on a loan of $750,000 which requires lenders insurance.

New grants available

If you’re a first home buyer building or buying a new house, there are also greater grants now available. In an incentive designed to increase supply of new housing, home owners looking to build a new property valued at up to $750,000 will be eligible for a $10,000 grant.

Similarly, buyers looking to purchase an already constructed new property valued at up to $650,000 will also be eligible for a $10,000 grant.

Super access

Meanwhile the Federal Government is also moving to make first home buying more accessible. From July 2018, first home buyers will be able to access up to $30,000 of voluntary superannuation contributions.

Announced in the recent budget, the initiative means first home buyers will be able to utilise super contributions that are above and beyond the 9.5% super guarantee in order to buy a property.

The Financial Review explains first home buyers: “will be able to withdraw a maximum of $30,000 of contributions, plus the earnings generated from those savings, from July 1, 2018. Contributions can be made from July 1 this year”.

Where’s the money coming from?

While the Federal Government will absorb the estimated $250 million cost of allowing first home buyers to tap their super, the NSW State Government is funding their incentives through foreign buyers.

As of July 1, 2017 foreign investors are to be slugged with a surcharge on stamp duty taking it from 4% to 8%. The surcharge on land tax has also rise from 0.75% to 2%.

Meanwhile, investors of any kind will no longer be able to delay stamp duty on properties bought off the plan, while the $5000 new home grant that was previously available has now been shut down.

About SJ Realty

Specialising in the Macarthur region, SJ Realty offers professional yet personalised service for buyers, sellers, landlords and tenants alike.

You can learn more about our services here, or contact us directly for further advice.