The NSW government's announcement that the $7,000 first home owner grant will now be available for homes valued up to $835,000 - up from $750,000 - is welcome, but changes should have been made to other schemes too, says the Urban Taskforce.
The taskforce's chief executive, Aaron Gadiel, says the adjustment to the first home owner grant ensures that homes priced at 1.4 times Sydney's median house price will be included in the scheme.
The change takes effect from 1 January 2011.
"Eligibility for the first home owners grant has widened because the housing undersupply has made all homes more expensive than they need to be," Gadiel says.
"Logically the zero stamp duty initiative -the NSW Home Builder's Bonus - should also have been adjusted at the same time.”
Since July 1 this year, no one pays stamp duty if they are buying a home worth up to $600,000 off-the-plan in the pre-construction stage. This saves home buyers up to $22,500.There's also a 25 per cent cut in stamp duty for those who buy later in the development process, once construction starts or a home is newly completed. This saves home buyers up to $5,600.
Additionally, when people aged over 65 purchase a newly-constructed home worth up to $600,000, they will pay no stamp duty - a saving of up to $22,500. This exemption applies irrespective of the stage of a home's construction.
"For the inner and middle ring suburbs of Sydney - where the overwhelming majority of the state's apartment development takes place - $600,000 is a low threshold," Gadiel says.
"The threshold should be adjusted upwards to $835,000 - this would align it with the new threshold for the First Home Owners' Grant."The abrupt cut off at $600,000 is distorting housing supply
