Stamp Duty Abolished For First Home Buyers
Seasonality plays an important role in the housing market as well as changes in Government policy. The Victorian Government has announced that stamp duty will be abolished for first-home buyers (FHB’s) purchasing a home below $600,000 for any contracts entered into from 1 July 2017. The exemption will apply to all residential property types, including homes, townhouses and apartments for both established and new homes. For homes valued between $600,001 and $750,000, stamp duty will be phased-in for eligible FHB’s.
It will be interesting to see the impact of this new initiative on market result in coming months. The removal of stamp duty for properties at the lower end of the market may assist FHB’s starting out on the property ladder and given them some confidence in taking the plunge to purchase. One might argue that it may only serve to drive prices higher as the increased numbers of FHB’s add to the competition.
REIV data indicates the proportion of sales below $600,000 for the June 2017 quarter is currently around 32 per cent. This is down from 41 per cent for the same period last year and 45 per cent in June 2015. These figures suggest that buyers have held off purchasing properties below $600,000 for the last three months.
Once the stamp duty concessions come into effect on July 1, experts believe that the sale of properties in this price bracket will likely increase in the middle and outer areas of Melbourne. The September quarter figures should be more reflective of the overall market performance so stay tuned for these results.
Some other housing initiatives include:
Pilot Program – “HomesVic”
A $50 million pilot program titled “HomesVic” will commence in January 2018 with the intention to assist FHB’s get their foot in the door. The program will give approximately 400 FHB’s an opportunity to co-purchase a property with the government. The program will be targeted towards couples earning up to $95,000 and singles earning up to $75,000.
To be eligible, purchasers will need a five per cent deposit and when the property is sold, the government will recoup its share of the equity. Those partaking in the program will be able to purchase with a small deposit and will also have a smaller loan to service. For further information about this program, please click here.
First Home Owners Grant Increase (for regional Victoria)
From 1 July 2017, the First Home Owners Grant will be doubled from $10,000 to $20,000 for first home buyers in regional Victoria. This grant will apply for a three year period. The existing First Home Owners Grant in metropolitan Melbourne will remain at $10,000.
Off the Plan Stamp Duty Concessions
From 1 July 2017, the existing stamp duty concession for investors for off-the-plan purchases will also be removed. However, the concession will only be available for purchasers who intend it to be their principal place of residence. It also applies to those who qualify for the first home buyer stamp duty concessions.