First-home buyers settle in on the Victoria market

08 January 2014

First-home buyers settle in on the Victoria market

The Australian Financial Review, Page 32, 8 January 2014

by Rebecca Thistleton

First-time home buying is expected to improve this year after falling to 20-year lows in 2013, through state government incentives targeted at new builds.

'We don't expect things to go ballistic or anything ... this time last year we were quite pessimistic but I'm feeling much more calmer this year," said Rory Costelloe, managing director of Villawood Properties.

First-home buyers made up about 12 per cent of the finance approvals granted towards the end of 2013. The long-term average is about 20 percent.

Mr Costelloe said the group was gearing up to launch a project on Sydney's fringe in the coming months as the city had an "insatiable" land market.

State government incentives designed to encourage housing construction should increase first-time buying this year. Mr Costelloe said first-home buyer activity had increased in Victoria's new home market after stamp duty concessions increased to 40 percent on July l last year.

'We've noticed a 50 per cent rise in weekly sales numbers," he said.

Victorian Treasurer Michael O'Brien said more than $150 million had been saved since stamp duty incentives were introduced for first-home buyers in July 2011.

"This financial year alone over 10,000 first-home buyers have saved almost $58 million from the concession," he said.

'This year alone we have seen more first home buyers in Victoria than in NSW and Queensland combined."

While homebuying activity accelerated in Sydney throughout 2013, first-home buyers have been excluded because of a lack of affordable housing.

The NSW government has also incentivised building a new home through stamp duty concessions and first-home grants. But agent Tony Santoro of Laing+Simmons Liverpool said land release was not keeping pace with demand.

State-by-state sweeteners: Incentives offered for first·time buyers 
  Stamp duty concessIon for first home buyers   First home buyers grant      
ACT • $20 total stamp duty for homes under $425,000 and land under $250,000. Part concession for homes up to up to $525,000.        • $12,500, only available to first home buyers who purchase new or substantially renovated properties
NSW • New homes up to $550,000 and land up to $350,000 exempt NSW· from stamp duty. Part concession for homes upto $650,000 and land up to $450,000. • $15,000 grant for first-time buyers for homes up to $650,000. Exemption from transfer duty available on new homes up to $500,000 and land up to $300,000.
NT • Up $7000 off stamp duty for new homes or land to build new homes. • $25,000 for a new home or any home in regional NT. $12,000 for an established home in the urban area.
Qld • Up to $8750 off stamp duty on homes up to $550,000. Vacant land up to $250,000 exempt. • $15,000 great start grant for newly·built or off the plan property up to $750,000.
Vic • 40 per cent discount for homes up to $600,000, will increase to 50 per cent in September. • $10,000 for first home buyers to build or purchase a new home up to $750,000.
WA • None, but lower rates for properties under $200,000 which will be the primary residence. • $10,000 for first home owners purchasing a new home, $3000 for established homes. Grant of up to $2,000 for established homes up to $400,000 bought through a licensed agent.
SA • New or substantially renovated homes up to $500,000are exempt from stamp duty.  • $15,000 first home owners grant for new home or building only, $8,500 housing construction grant.
Tas • None.  • First home builder boost is $23,000 until December 31, 2014. 

Source: Loan Market

"New land releases are critical to meeting current buyer demand, however they need to be fast tracked," he said Louis Christopher, managing director of SQM Research, said he had expected more first-home buyer activity in 2013 but was confident that new home incentives and low interest rates would encourage new owners to the market this year.

'They're overdue to be coming into the market," he said. "If we still had incentives for existing homes it would only push up prices, it makes sense for there to benefits on new housing."

However, Mr Christopher said there was more room for governments to reform taxes to further improve affordability.

Paul Smith of Loan Market said incentives and concessions differed across the country and there was no 'one size fits all' solution. Mr Smith said state governments had two main levers to play with–a grant to purchaser, and a concession on existing taxes. Both reduce the amount of cash a first-home buyer needs up-front.

Some of the heaviest incentives ever offered were now available for newly built homes, he said, which had begun to lift enquiry levels for first-time mortgages towards the end of 2013.

"As the prospective pool of first home buyers grows, we'll eventually see the return of this important consumer group," he said.

“The most important thing for first-home buyers to do is to start researching early ... not just shopping around for a property they love, but paying attention to your state's buying incentive schemes." 

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