Property analysts and developers are calling for greater stamp duty concessions for new builds across Australia in a desperate bid to entice investors back into the nation’s on-edge real estate market.
The call comes as the New South Wales government on Monday announced greater stamp duty exemptions for first-home buyers purchasing newly-built over the next 12 months as part of its COVID-19 Recovery Plan.
There are growing calls for governments to widen stamp duty concessions to entice investors and boost construction. Picture: Getty.
From 1 August, first-home buyers purchasing newly-built homes of up to $800,000 will be exempt from paying stamp duty. Discounted stamp duty is available on new properties up to $1 million.
In addition, the stamp duty exemption threshold on vacant land will rise from $350,000 to $400,000 and will phase out at $500,000.
The new thresholds will apply to contracts executed between August 1, 2020, and July 31, 2021.
The stamp duty changes come in addition to the existing $10,000 first homeowners grant in NSW and the federal government’s recently announced $25,000 HomeBuilder grant for eligible owner-occupiers who build or substantially renovate their homes.
Housing Industry Association NSW executive director, David Bare, said the stamp duty changes in NSW would have a positive impact on the state’s residential construction sector as well as the greater economy.
“The government is forecasting that this change will assist more than 6000 first-home buyers, which have traditionally been under-represented in the NSW market, particularly in Sydney,” Mr Bare said.
“More importantly, this 12-month package will provide a much-needed boost to an industry for which hundreds of thousands of people in NSW rely on for employment.”
Plenty of incentive for first-home buyers but what about investors?
Nerida Conisbee, chief economist at realestate.com.au, said while government incentives across Australia had encouraged the first-home buyer market to help drive the economic recovery, consideration still needed to be given to incentives for investors.
“The construction sector has already had a massive boost [with first-home buyer incentives],” Ms Conisbee said. “We can see with first-home buyer enquiries that the statistics are well up on last year.
“What these stamp duty changes in NSW are doing is helping out with Sydney. Sydney is a very expensive city and trying to get a stamp duty exemption at that price point prior to this announcement was pretty difficult. So basically, this adjusts the market to really help people buy a new home in a very expensive city.
Nerida Conisbee says new temporary stamp duty thresholds in NSW will make expensive Sydney property more accessible. Picture: Getty.
“The big issue at the moment is that although there are lots and lots of [incentives] available to first-home buyers, where we really have the problem is that investors have backed out of the market.
“That’s problematic in that investors primarily are the major purchasers of off-the-plan developments and that area is not getting much of a boost from all of the government spending that’s been taking place.”
She said Western Australia had experienced a massive explosion in first-home owner enquiries, particularly with land sales.
“In WA, first-home buyer activity has almost quadrupled from last year. We can see that they are benefiting from government spending. We know that house and land developers, for example, are doing very well off the back of this and that will be the case in Sydney again. These new stamp duty incentives will really benefit house and land developers.”
“There’s never been a better time to look at incentivising new builds”
Danny Andrews, director of Gold Coast-based apartment developer, Andrews Projects, said greater stamp duty exemptions were needed to stimulate new builds and off-the-plan developments.
“If governments want to stimulate the economy, they need to look at stamp duty on new builds,” Mr Andrews said.
“It’s about incentivising to stimulate the economy and giving a holiday on stamp duty for new builds. Construction contributes so much to the Australian economy.
Developers say incentivising new builds would have a huge roll on effect for construction jobs and the economy. Picture: Getty.
“If they want to create jobs, they need to incentivise new builds… stamp duty shouldn’t be the same for new builds versus existing homes because there’s no stimulus when someone buys an existing home.”
Damien Ross, national sales manager for Queensland land developer, QM Properties, said business had hit a record high in June after the federal government’s HomeBuilder grant was announced.
“Queensland seems to be travelling quite well compared to other states, we seem to be a little bit more insulated. We had a slump in April and May was quite a good month, but June just went crazy – literally,” Mr Ross said.
“We had our biggest month in 27 years in June.
“The $25,000 [HomeBuilder] grant is right in our sweet spot. We deal a lot with first-home buyers and owner-occupiers, but not so much in investment channels.
“Most of the packages we sell are around $400,000 to $450,000, so $25,000 for a first-home buyer buying a $400,000 package is a pretty good carrot.”
A state-by-state guide to stamp duty costs:
Want to know what you’re up for when it comes to land transfer taxes and duties? Read on.
Australian Capital Territory
Under new provisions, first-home buyers pay no transfer duty. All types of property, up to any price, are eligible. However, there are some income thresholds for applicants.
New South Wales
Under this week’s announcement, first-home buyers are exempt from stamp duty for properties up to $800,000. Concessions apply to homes for up to $1 million.
Northern Territory
In the NT, you may also be able to apply for a BuildBonus Grant, potentially worth $20,000, or a Territory home owner discount, worth up to $18,601 off stamp duty.
Queensland
You can also apply for a first home concession on transfer duty for a home valued up to $500,000 up to $15,925. A home concession may still apply on properties above this price.
South Australia
First-home builders who are still constructing on June 30 (the date state land tax is calculated) can apply for an exemption if they intend to move into the property as their primary place of residence before June 30 of the following year.
Tasmania
A 50% transfer duty concession is available to first home buyers on established properties valued at or below $400,000.
Victoria
A stamp duty exemption is available on first homes valued below $600,000. Concessions are available for properties priced between $600,000 and $750,000.
Western Australia
First home buyers may be eligible for a concessional rate of transfer duty concessions, potentially including established stock.
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