*First published in the Midland Express, July 2017.
We know that buying your first home is difficult. With upfront costs, stamp duty and fees, many people trying to enter the market feel that the cost to entry is like climbing Everest. It might take years and you still might not make it to the top.
A young family who is seeking to buy their first home in Kyneton told me “It would feel like we won the lottery to finally own a house!” The barriers for this family are huge, particularly when competing with keen investors and the costs outside of the overall purchase price.
As from the 1st July 2017, Victoria will see first home owners no longer paying stamp duty on homes both new and existing valued under $600,000. First home buyers purchasing a property between $600,000 and $750,000 will also receive a tapered discount.
Aimed at putting first home-owners on equal playing field, these tax concessions are a boosted incentive for those struggling to enter the market. This can only be a good thing.
For sellers, it is an opportunity to secure a sale from those who were previously reluctant to take the leap because a large proportion of their deposit would have gone on to stamp duty.
Opportunities like this can open up sales opportunities to an emerging group of buyers. So consider this a possible win-win for both first home buyers and those that were worried their house might sit unsold.
For many who have been waiting in the wings, the doors are finally about to open!
In an effort to battle the issue of housing affordability, the Victorian Premier Daniel Andrews has announced reforms aimed at helping first home buyers. From 1st July 2017, the Victorian government will abolish stamp duty for first-home owners.
What exactly is stamp duty?
Stamp duty is a tax paid on written documents and several types of transactions including motor vehicle registration, insurance policies, and transfers of property (including real estate). This tax operates at the State and Territory level, meaning that home-buyers in different parts of the country will pay varying amounts of stamp duty on similarly priced property transactions.
What does it mean for first home buyers?
This is one of the most significant changes made in the recent discussions on housing affordability.
Online stamp duty calculators estimate that a first home-buyer in Victoria would pay $17,145 in stamp duty for a property worth $600,000. Removing this tax for first home-buyers is a significant change.
What does it mean for Kyneton?
As someone who has been in the real estate game for many years, I understand that many first home-buyers are not seeking a mansion. Many of them are looking for the first step into an elusive market. They want a roof over their heads and an opportunity to have a future for themselves.
One of the issues raised when the reforms were announced was that the reduction in stamp duty could drive up the housing costs. What we might see is more owner-occupiers having the opportunity to buy their own home and less investors purchasing. The issue of limited supply in some areas might impact on the rental market but the initiative favours who it is intended to – first home-buyers and those that sell their homes.
With a number of new developments in Kyneton in the works, it looks like this incentive will only benefit the community and the people who want to live in it.