$25k first home buyer grants tabled as part of NSW stamp duty reform

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First home buyers would be able to access grants of up to $25,000 from the state government to assist them with property purchases under a new initiative outlined by New South Wales Treasury.

Released as part of the Treasury’s NSW Property Tax Proposal progress paper, the initiative would see grants replace the existing stamp duty concessions available to first home buyers.

The grant is part of a wider set of measures put forward by the state government to reform property tax in New South Wales, the most significant of which would be the replacement of stamp duty with a ‘broad-based’ land tax.

“The proposed new property tax system, which replaces stamp duty with a small, annual tax, would not be a panacea for our future economic challenges. Nor could it single-handedly solve the ever complex home-ownership puzzle for NSW citizens,” said NSW Treasurer, Dominic Perrottet.

“But it would make things better - substantially so. It would stimulate home ownership, grow the economy and create jobs. It is estimated that, as a result of reform, more than 300,000 NSW residents could achieve their dream of home ownership and Gross State Product could increase by 1.7%.”

First home buyers are said to be at the core of reform efforts, with the progress paper noting that home ownership rates for younger residents in New South Wales have dropped significantly over the last two decades.

From 1995-96 to 2017-18 the average age of first home buyers increased from 33 to 35, while the share of these buyers aged under 35 dropped from 69% to 55%.

With property prices having surged over recent years though, so too has the amount of stamp duty required of buyers - creating an additional hurdle for many first home buyers.

Not only is the switch to an annual land tax hoped to ease this upfront cost for buyers, the introduction of a new first home buyer grant would seek to address concerns that the current concessions haven’t kept up.

At present, New South Wales offers full first home buyer stamp duty concessions on property purchases up to $650,000 and partial concessions on purchases up to $800,000.

According to Treasury though, the state of property prices means that as many as one third of first home buyers are paying the full amount of stamp duty.

Corelogic’s latest figures show that home values in Sydney have increased by 11.2% over the past year to a median value of $970,355, which is well above the maximum stamp duty concession threshold currently in place.

While there’s currently no set date for any of the reforms to be enacted, the state government says that it will continue to seek feedback until the end of July 31. 

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