NSW Budget Proposed stamp duty changes
On Tuesday, the NSW government announced its budget. This included proposed reforms to stamp duty. Following a period of consultation, home buyers in the future may have the option of paying an upfront stamp duty (like today) or an annual fee. Investors will probably not enjoy the same privilege.
How will the proposed changes to stamp duty impact the property market?
• It will largely depend on the final details, but we feel it's likely to be a welcome and popular update with home owners.
• Property prices may not be affected. Usually, when there is a reduction in upfront costs, the saving is built back into the price thus resulting in price growth. However, buyers who chose not to pay in full upfront will still have to budget for the annual tax payment when determining mortgage serviceability therefore keeping prices in check.
• First home buyers are likely to be incentivised by this change. Research from CoreLogic states the cost of upfront stamp duty is a leading hurdle for first home buyers.
• We may see an increase in the turnover of housing stock as many people are reluctant to move due to stamp duty costs. This could also lead to greater housing stock efficiency eg, it may encourage empty nesters to downsize.
• No change is expected for 12-18 months and some buyers and sellers may choose to wait until then. This would reduce stock levels even further making conditions even better for sellers today.