Victoria axes stamp duty for first home buyers
The Andrews Government in Victoria has introduced a range of measures to help with the growing challenges around property price growth being driven by record low interest rates, strong population growth and supply not being able to keep up with demand.
First Home Buyers (FHBs) will see the following incentives to help them get into the market flowing their way from July 1, 2017:
- FHBs will be exempt from paying Stamp Duty for purchases below $600,000
- FHBs paying between $600,000 to $750,000 will also receive a reduced stamp duty concession on a sliding scale
- The establishment of a Shared Equity Scheme, whereby 400 FHBs can co-purchase either a new or an existing property, with the government offering to take up to a 25% interest in the property for lower income households that struggle to save a deposit
- In regional Victoria, FHBs will see the existing $10,000 FHB grant double to $20,000 for new home purchases.
These changes are in addition to the existing exemptions and concessions available via the First Home Owner Grant and other stamp duty concessions for other home buyers currently available.
In a further move to combat house prices and help pay for these new initiatives, the state government is attempting to dampen investor demand for property by scrapping the current exemptions for investors buying off the plan property in Victoria from July 1.
This means investors will no longer just pay stamp duty on the land portion, but they will pay it on the total dutiable value which brings Victoria in line with most other states.
On the supply side, from January 1, 2018, the Victorian Government, in a further revenue grab, is set to introduce an annual Vacant Property Tax of 1% on the capital improved value for properties that remain vacant for greater than six months over the full calendar year.
There will be some exceptions such as holiday home use or city unit for work purposes.
There is no doubt other state governments, in particular NSW, will be watching closely to see whether these initiatives will have the desired result in improving housing affordability or whether they will have the reverse effect by increasing demand for housing when supply simply can't keep pace.
In NSW's case, one thing is certain, it will need to lift the price thresholds by at least $200,000 if it is going to have any real benefit to first home buyers.
Tackling housing affordability does require a raft of policy initiatives that are sensible and try to address the supply imbalance, where it can be addressed, as opposed to taking a wrecking ball to the total housing market which would occur if you make changes to negative gearing and capital gains exemptions.