YBR

Housing affordability for first home buyers

In this article:

A round-up of the incentives offered across the country - make sure you're not missing out.

Australia’s housing affordability issues are a hot topic in the press right now. Much of the debate centres around what the state and federal governments should or should not do to help the situation, particularly for first home buyers.

The fact is there are already a number of first home buyer incentive programs in place. Surprisingly, awareness is not high and so many people are missing out on an important entitlement.

Housing affordability

Housing affordability is a measure of the average income against average house prices, and varies widely from state to state and city to city.

One of the most widely respected measures of housing affordability, the annual Demographia International Housing Affordability Survey, has consistently ranked Australia as having one of the most unaffordable markets.

At a national level, the 2017 survey ranked Australia the third most unaffordable of the countries surveyed. Hong Kong was by far the most unaffordable, followed by New Zealand. Singapore, the UK, Japan, Canada, the US and Ireland ranked as more affordable than Australia.

The survey divvies the participating countries up into some 400 urban markets. Notably, of the 406 urban markets surveyed in 2016, Sydney was ranked second most unaffordable and Melbourne was ranked sixth.

The good news is that regional markets were substantially more affordable, and the Australian markets of Karratha, Port Hedland, Kalgoorlie, and Gladstone were amongst the most affordable in the world.

Government Assistance

Surprisingly, there is no nationwide scheme to encourage first home buyers to get in on Australia’s difficult housing market. Fortunately, each of the Australian states do offer some kind of incentive, but they don’t seem to appropriately address the differences in affordability across the states nor are they proportional to those differences.

We’ve included a comparison of the incentives offered to first home buyers in each state and territory below.

While these comparisons are not exhaustive, it is clear that there is no direct link between housing affordability in each state and territory, and the incentives offered.

For example, the median price of a house in Brisbane is half that of Sydney, yet first home buyers in Queensland are eligible right now for a grant double that offered in NSW. It’s also far more likely that a first home buyer will be able to purchase a property in Queensland capital city for under the grant’s property value cap, unlike in NSW, where first home buyers can really only take advantage of the incentives offered if they buy in the city’s outer areas.

There’s no doubt that housing affordability is a complex issue and requires a multi-faceted, sustainable solution. However, a nationwide scheme might be a good start.

 

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Victoria

The median house price in Melbourne is $795,447.

Stamp duty concessions and exemptions:

  • A 50 percent reduction is currently offered on new or existing homes valued up to $600,000. From 1 July first-time buyers purchasing a home valued to $600,000 stamp duty will be abolished.
  • The Victorian Government has proposed to help first home buyers by completely abolishing stamp duty for both new and existing properties under $600,000 from July 1. First home buyers purchasing a property between $600,000 and $750,000 will also receive a tapered discount. This could be worth up to $15,000. i
  • Should the proposal pass in Parliament, it will be implemented from 1 July 2017.

Grants:

  • The First Home Owner Grant provides $10,000 towards a new home being bought or built valued up to $750,000.
  • The Victorian government recently announced that it would double the grant in regional Victoria from 1 July.
 

i State Revenue Office Victoria (2017) (n.d.). Fact Sheet – Homes for Victorians – Stamp Duty. Retrieved April 31, 2017.


NSW

The median house price in Sydney is $1,123,991.

Stamp duty concessions and exemptions:

  • First home buyers are exempt from stamp duty on new properties valued up to $550,000. This could be worth up to $20,240.ii Concessions are provided on new homes valued between $550,000 and $650,000.

Grants:

  • The grant is applicable to new homes valued under $750,000 for contracts dated on or after 1 July 2014.
  • The grant was reduced from $15,000 to $10,000 on 1 January 2016, but applicants are still eligible for the $15,000 for contracts executed prior to that date.

 


ii Based on purchase of a new home to the value of $550,000.  NSW Government. (2016) Office of State Revenue. First Home-New Home Calculator. Retrieved March 28, 2017.


Queensland

The median house price in Brisbane is $540,758 vi.

Stamp duty concessions and exemptions:

  • All homebuyers in Queensland receive stamp duty concessions, but first homebuyers receive additional discounts on properties valued up to $550,000.  This could be worth up to $10,600.

Grants:

  • The Queensland First Home Owners' Grant has been boosted from $15,000 to $20,000 – but the boost will end 30 June 2017.
  • The grant is applicable to new houses, units or townhouses valued at less than $750,000.

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Northern Territory

The median house price in Darwin is $591, 167.

Stamp duty concessions and exemptions:

  • The First Home Owner Discount exempts first home buyers from stamp duty on existing homes valued up to $500,000. This could be worth up to $23,928. The discount does not apply to new homes.

Grants:

 


iii Based on purchase of a new home to the value at $650,000 or less. Northern Territory Government. Department of Treasury & Finance. First home Owner Discount. Retrieved March 31, 2017.


Western Australia

The median house price in Perth is $573,766.

Stamp duty concessions and exemptions:

  • The First Home Owner Rate of Duty is a stamp duty concession for homes valued under $530,000. For homes valued under $430,000, no duty is payable.
  • The duty is payable at a rate of $19.19 for every $100 of duty payable on homes valued between $430,000 and $530,000. This could be worth up to $14,440.iv

Grants:

  • The First Home Buyers Grant provides up to $10,000 for new homes. Contracts signed
  • between 1 January 2017 and 31 December 2017 may be eligible for an additional boost payment of $5,000, subject to conditions if the home is being constructed or bought ‘off the plan’.

 


iv Based on purchase of a new home to the value of $430,000.  Government of Western Australia. Office of State Revenue. Transfer of Residential Property – Fact Sheet & First Home Owner Rate of Duty.  Retrieved March 31, 2017.


Australian Capital Territory

The median house price in Canberra is $684,395.

Stamp duty concessions and exemptions:

  • First homebuyers pay $20 on new or substantially renovated homes up to the value of $468,000. A concessionary rate of $14.70 for each $100 (or part thereof) above $468,000 is payable on properties up to a value of $590,000. This could be worth up to $12,160 for those who qualify. v

Grants:

  • The First Home Owner Grant is available for new or substantially renovated properties valued under $750,000. The grant was reduced from $10,000 to $7000 on 1 January 2017.

 


v Based on outcome of means testing the Stamp Duty Concession.  ACT Government.  ACT Revenue. Home Buyer Duty Concession. Retrieved March 31, 2017.


South Australia

The median house price in Adelaide is $501,166.

Stamp duty concessions and exemptions:

  • There are no concessions specific to first home buyers. Concessions apply to new or substantially refurbished apartments and off the plan properties.

Grants:

  • A First Home Owners Grant of $15,000 is available for new homes.


Tasmania

The median house price in Hobart is $382,888.

Stamp duty concessions and exemptions:

  • The Duty Concession is a concessional rate on stamp duty for first home buyers. Two types of concessions are available; up to $4000 for the purchase of established dwellings valued up to $350,000 and up to $2400 for the purchase of vacant land valued up to $175,000 on which a home is built under a comprehensive home building contract by a builder or an owner builder.

Grants:

  • The First Home Owner Grant provides $20,000 for new homes, homes off the plan and owner/builder homes. The payment will revert to $10,000 for transactions entered into after 1 July 2017.

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iState Revenue Office Victoria (2017) (n.d.). Fact Sheet – Homes for Victorians – Stamp Duty. Retrieved April 31, 2017.

iiBased on purchase of a new home to the value of $550,000.  NSW Government. (2016) Office of State Revenue. First Home-New Home Calculator. Retrieved March 28, 2017.

iii Based on purchase of a new home to the value at $650,000 or less. Northern Territory Government. Department of Treasury & Finance. First home Owner Discount. Retrieved March 31, 2017.

iv Based on purchase of a new home to the value of $430,000.  Government of Western Australia. Office of State Revenue. Transfer of Residential Property – Fact Sheet & First Home Owner Rate of Duty.  Retrieved March 31, 2017.

v Based on outcome of means testing the Stamp Duty Concession.  ACT Government.  ACT Revenue. Home Buyer Duty Concession. Retrieved March 31, 2017.

vi Median house prices sourced from Domain Group’s rental and house price report for December 2016.