Important Changes from 1 July 2012

So you would have probably all heard about the carbon tax being introduced on 1 July 2012. It is the political hot topic and has been reported on in every media outlet at every opportunity, and while the carbon tax may have stolen all of the attention, there have also been some significant changes in the property market around 30 June 2012 and 1 July 2012. Here are some examples.

Starting

From 1 July 2012, the New South Wales government introduced a $5000 grant to anyone buying new homes, whether off the plan or newly built, with a value up to $650,000 or to anyone buying vacant land valued up to $450,000 with the intention that it is to build a new home.

Ending

The NSW Home Builders Bonus was introduced to stimulate the construction of new homes in New South Wales by offering exemptions and concessions on new homes, off the plan purchases, and vacant land. There was a full concession on stamp duty where the building work had not commenced, and a partial concession of 25% where building work had commenced. The NSW Home Builders Bonus ended on 30 June 2012.

The future

The First Home Owner Grant as we know it (currently $7,000) is coming to an end. From 1 October 2012, the grant will only apply to new homes but increases to $15,000. The cap also reduces from $835,000 to $650,000.

From 1 January 2014, the First Home Owner Grant (New Homes) will reduce from $15,000 to $10,000.

These changes follow the already implemented change to the stamp duty exemption and concession when the First Home Plus Scheme was replaced by the First Home New Home Scheme on 1 January 2012.

What does this mean?

In the past, we have witnessed the trends and experienced the flow-on effect in terms of the number of property transactions due to announced changes to stamp duty and first home owner benefits.

There have been times when those announcements have results in significant changes in the market. For example, when the First Home Owner Grant of $21,000, first home buyers literally flooded the market with unrealistic expectations and ridiculous offers, many offering beyond their capacity and much higher than advertised asking prices just so that they could be the successful buyer (please note that at the time interest rates were also at an all time low).

There have been other times when the effect has been less dramatic, but still noticeable – like when the First Home Plus Scheme came to an end on 31 December 2011 we also experienced an increase in first home buyers hoping to take advantage of the stamp duty exemptions before it ended.

No doubt, the announced end to the First Home Owner Grant on 30 September 2012 will encourage some first home buyers to take action rather than wait – but with any change, there are always going to be perceived winners and perceived losers.

First home buyers entering or leaving the market because of the various benefits also influences whether investors enter or leave the market. Maybe for an investor, waiting until after 1 October 2012 means there are less first home buyers to contend with or compete against. In any case, only time will tell.

Fortunately, we assist first home buyers and home buyers alike, as well as property investors and so from our perspective we see a full spectrum of how changes to law and policy influence different parts of the property market at different times. Our insight is your benefit, so if you are in the property market regardless of whether you are buying or you are selling, we should talk and hopefully our experience proves to be valuable to you in your property dealings.

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Ern Phang

Ern Phang
Director - Property Lawyer

This website is supported by Phang Legal, a law firm in Parramatta providing fixed fee conveyancing services across Sydney and New South Wales. Ern Phang is the solicitor director of Phang Legal.