NSW to scrap full first home stamp duty concessions for existing homes from 2012

The NSW Government will limit full stamp duty concessions to those buying new homes from January 1, 2012.

First-home buyers will no longer have their stamp duty fully subsidised by the state government unless they buy newly constructed homes.

Hitherto hesitant first-home buyers are set to boost the spring buying season, snapping up established house and units before the January 1 introduction.

The shock measure was unveiled by Treasurer Mike Baird in the Coalition's first budget in office.

"We recognise this is a difficult decision, but we believe it is necessary to make buying a new house relatively more attractive than buying an existing dwelling for first-home buyers," Baird says.

"The government has therefore decided that from January 1 next year, while all eligible first home buyers will continue to receive the $7,000 first-home owner's grant, eligibility for additional stamp duty concessions will be limited to those purchasing newly constructed homes, including 'off the plan'," the Treasurer says.

"We will continue to closely monitor housing sector conditions and will work closely with the sector to develop further options to encourage growth."

Some first-home buyers will lose up to $17,990 exemption.

The Daily Telegraph's Andrew Clennell reports that in the budget briefing, Baird predicted the housing market would spike up until January 1 as a result of the change and claimed that after January 1 more much-needed new homes would be built.

First-home benefits of up to $24,990 have been available, including the $7,000 First Home Owner Grant and a duty exemption of up to $17,990 under the First Home Plus Scheme.

The $7,000 first-home buyer grant will continue to be available to all eligible first-home buyers.

Baird says stamp duty concessions need to be directed to stimulate the struggling construction sector.

"With new housing at historically weak levels, and a weak fiscal position, we need to target our assistance to home buyers to where it is most needed in the economy," he says.

The revised First Home Plus and First Home Plus One schemes will provide full transfer duty exemptions for eligible first-home buyers purchasing a newly built home costing up to $500,000 and partial transfer duty exemptions for homes costing between $500,000 and $600,000.

Baird's first budget, released today, was a mix of cuts and new spending, with a $718 million budget deficit forecast for 2011-12, although the bottom line is a return to surplus in the next three years through savings measures.

The Urban Taskforce has welcomed the NSW Government's decision to limit first-home buyers' stamp duty concessions to newly built homes.

The Taskforce's chief executive, Aaron Gadiel, says the $1 billion revenue measure is a sensible step that would help boost NSW's supply of new housing.

"This reform will remove the current scheme's inflationary impact on home prices, and will make more housing available to more people," Gadiel says.

"This is good public policy."

Gadiel says the existing first-home buyers' stamp duty concessions have been poorly targeted for far too long.

"NSW's housing supply has been heavily constrained by the planning system and high development levies," he says.

"By tying stamp duty concessions exclusively to new housing, the inflationary impact on existing housing will be removed, and brand-new homes will be more attractive to home buyers."

This article first appeared on Property Observer.

 

RBA chief hints rates could rise soon. source AAP

Australia's central bank chief has hinted interest rates could rise before an expected peak in unemployment next year, suggesting the federal government is more likely to face voters as home borrowing costs climb.

Reserve Bank of Australia (RBA) governor Glenn Stevens also said Australia's economic downturn would not turn out to be the most severe since World War II, signalling a belief that the worst of the global recession may be over.

Financial markets expect interest rates, at a half-century low of three per cent, to rise to four per cent by the second half of 2010.

Mr Stevens told a lunch in Sydney that the central bank would necessarily wait until unemployment peaked before moving on rates.

The RBA began cutting rates in September last year as the global financial crisis hit but is expected to reverse course in the second half of 2010 to head off inflationary pressures as the economy recovers.

The government expects unemployment to peak at 8.5 per cent in the second half of 2010, up from 5.8 per cent at present.

"I've never seen it written down or I have never heard in discussions ... some rule of thumb that we wait until unemployment has peaked before lifting rates," Mr Stevens told the Australian Business Economists luncheon on Tuesday.

The comments are significant in that they reveal a possible policy shift, as did Mr Stevens' comments at the same venue a year ago when he said rates would be cut before inflation moderated.

Two months later, the RBA began an aggressive series of rate cuts.

JP Morgan chief economist Stephen Walters said the comments were a sign interest rates would rise in 2010, even as unemployment rose, to prevent an inflation breakout in 2011 and 2012.

"Politically that's going to be quite tough for the government," Mr Walters told AAP on Tuesday.

"It will be a tough one to sell, but the (RBA) governor did not rule out that scenario."

The next federal election must be held by early 2011.

Mr Stevens also appears more upbeat than Prime Minister Kevin Rudd, who regularly asserts that Australia is exposed to the worst global uncertainty since The Great Depression.

"It appears at this stage ... that the downturn we are having may turn out not to be one of the more serious ones of the post-war era, in contrast to the experiences of so many other countries," Mr Stevens said.

The central bank boss signalled that the worst of the downturn for Australia could be over.

"It is becoming more common for Australians to see the glass as half full than as half empty," he said.

"Put another way, we can more easily imagine upside risks to the outlook, to balance the downside ones, than was the case six months ago."

In another sign the economy could be on the mend, a National Australia Bank survey, released on Tuesday, showed business confidence recovered in the June quarter to its best levels since the start of the global financial crisis in September 2008.

However, in a report released on Tuesday, leading economic forecaster Access Economics said it expected business investment to continue to fall over the next 12 months.

The report said private investment had fallen to a record low in the June quarter and was only propped up by state and federal stimulus programs.

The Buying Process: Insider Information!

CENTURY 21 Helps First Home Buyers with some tips from the experts  

The process involved in searching for your first property to buy is somewhat daunting to say the least! With a market full of first home buyers mistakes are inevitable. With so many aspects involved in a highly complex purchase, first home buyers can be left dazed and confused by the experience. 

Having an agent who is happy to take the time to walk you through each step and address your queries is half the battle won when it comes to buying your first home. CENTURY 21 Wentworth Falls place a great deal of emphasis on ensuring buyers are comfortable with the experience and fully aware of the options available to them. 

“Our experience with first home buyers is always pleasant due to our open communication policy that welcomes them voice any confusion no matter how trivial it may seem,” says Bianca Brown.

 

 Preparation is paramount when it comes to buying your first home. Simple handy tips such as taking notes on inspections will assist when it finally comes to making your biggest purchase yet! “In addition to general advice, we like to ensure the purchaser is aware of the legal implications of their purchase and contract,” added Bianca Brown. “It is essential to have a good solicitor who is happy to cover any legal jargon you don’t understand.” 

First home buyers are encouraged to commission independent inspections. There are many professional contractors available to provide this service, however on your first inspection of the property Bianca Brown says it’s a good idea to give the property a general once over yourself. “Not all houses are going to be in excellent condition. But it is important to understand the extent of any structural faults, infestations, etc before you commit to the purchase.”  

A few areas easy to check yourself include looking for gaps between the floor and skirting boards as well as checking their stability; signs of rising damp which are indicated through rotting carpet and mould on the walls or ceiling; test water pressure in both hot and cold taps. Once outside things to look for include, fences and gates identifying stability and rot; condition of eaves; broken tiles on the roof and anything else that may seem amiss. 

A better understanding of this process will guarantee a good purchase.