New Opportunities For First Home Buyers

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John McGrath

Real Estate Expert

Great news, you can still buy your first home with these tips and tricks from John McGrath.

With first home buying across Australia at its lowest level in more than a decade, I want to encourage young people to re-think their position and look into the grants and stamp duty concessions available to them today.

paddoImage via McGrath 

Every single state and territory in Australia is currently offering assistance to first homebuyers – and not just on new property purchases either.

Every now and then the rules change and young people need to keep abreast of these changes so they can best take advantage of them.

For example, did you know the Queensland Government has introduced a $5,000 boost to their First Home Owners’ Grant for this financial year only? This is a one-off, one-year boost to the grant from $15,000 to $20,000 that will end on June 30, 2017.

While it’s true that all grants are limited to newly built, off the plan or substantially renovated properties, some stamp duty concessions apply to both new and established homes.

It’s really worth taking the time to check out exactly what assistance is available to you, especially with interest rates at such record lows and likely to stay this way indefinitely. You put these two factors together and motivated first homebuyers can do very well right now.

Although affordability is a big hurdle in cities like Sydney, I see a major opportunity ahead for young buyers in prime east coast markets.

That opportunity is the impending oversupply of new apartment stock in Melbourne, Brisbane and to a slightly lesser extent, Sydney. Where a market is oversupplied, prices fall. It’s that simple and that means opportunity for buyers.

The impending apartment oversupply means first homebuyers will be able to:

– Buy for a better price
– With more negotiating power
– With more choice of property available to them
– With more time on their side to choose their next home
– With tens of thousands of dollars in grants and duty concessions to assist them

Now, a few words of caution when buying in an oversupplied market.

1. You have to be careful in your choice of location. Pick a desirable area close to amenities with easy access to major employment hubs. Once the oversupply has been absorbed (which might take a few years), prices will begin rising again in good quality suburbs

2. Be careful in your choice of product. Focus on good quality developments and choose an apartment that has some unique features, such as a particularly large floor plan, generous balconies or courtyards, great privacy, views or a north aspect. Avoid small uninspiring apartments in developments where every property is the same.

3. Shop around for finance. Some lenders are avoiding certain postcodes (primarily central CBD areas) not because they’re bad areas to buy in but because the oversupply creates too much short-term risk for the banks. So you’ll need to talk to a broker to find out which lenders are appropriate for you if you want to buy in these areas.

4. Buy for the long term. I can’t stress this enough. The oversupply will take some time to run its course. Don’t put yourself in a situation where you need to sell during the oversupply period. Oversupplies are only advantageous to buyers.

Here is a brief overview of the grants and stamp duty concessions available in each state and territory. For more comprehensive information, go to www.firsthome.gov.au.

New South Wales

Grants

Name: First Home Owner Grant (New Homes) scheme

Eligible price point: $750,000 or less

Eligible properties: New homes

Amount: $10,000

Stamp duty concessions

Name: First Home – New Home scheme

Eligible price point: Full exemption up to $550,000, concessional rates for new homes valued between $550,000 and $650,000

Eligible properties: New homes

Victoria

Grants

Name: First Home Owner Grant

Eligible price point: $750,000 or less

Eligible properties: New homes

Amount: $10,000

Stamp duty concessions

Name: First home buyer duty reduction

Eligible price point: $600,000 or less

Eligible properties: All properties

Amount: Up to 50% discount on stamp duty

Note: A second scheme called the Off-the-Plan Concession provides a further discount specifically for off-the-plan purchases

vicImage via McGrath

Queensland

Grants

Name: First Home Owners’ Grant

Eligible price point: $750,000 or less

Eligible properties: New homes

Amount: $20,000 until June 30, 2017

Stamp duty concessions

Name: First Home Concession

Eligible price point: $550,000 or less

Eligible properties: All properties

Amount: Stamp duty exempt to $500,000, sliding scale from $500,000 – $549,000

Note: A second scheme called the Home Concession provides stamp duty concessions on all properties at any price point purchased for owner-occupation. If your first home is above $550,000, you can apply for a concession through this scheme 

Australian Capital Territory

Grants

Name: First Home Owner Grant

Eligible price point: $750,000 or less

Eligible properties: New homes

Amount: $10,000

Stamp duty concessions

Name: Home Buyer Concession Scheme

Eligible price point: Full concession up to $455,000; sliding scale to $585,000

Eligible properties: New homes

Other criteria: Gross income thresholds apply. For example, the threshold for applicants without children is $160,000. You do not need to be a first home buyer but you cannot have owned property for the past two years

Amount: Stamp duty reduced to just $20 on properties worth $455,000 or less

Western Australia  

Grants

Name: First Home Owner Grant

Eligible price point: $750,000 cap on properties south of the 26th parallel (ie Perth metropolitan areas) and $1 million cap on homes north of the 26th parallel

Eligible properties: New homes

Amount: $10,000

Stamp duty concessions

Name: First Home Owner Rate of Duty

Eligible price point: $530,000 or less

Eligible properties: All properties

Amount: Stamp duty exempt on homes worth $430,000 or less. Sliding scale of concessions on homes valued $431,000 – $530,000

South Australia

Grants

Name: First Home Owner Grant

Eligible price point: $575,000 or less

Eligible properties: New homes

Amount: $15,000

Stamp duty concessions

Name: Off-the-Plan Apartment Concession

Eligible price point: No threshold

Eligible properties: Off-the-plan apartments

Amount: Partial concessions available until June 30, 2017. Amount depends on the stage of construction at the time of purchase

Northern Territory

Grants

Name: First Home Owner Grant

Eligible price point: No threshold

Eligible properties: New homes

Amount: $26,000 plus a further grant of up to $2,000 under the Household Goods Grant Scheme

Stamp duty concessions

Name: First Home Owner Discount

Eligible price point: $650,000 or less

Eligible properties: Established properties

Amount: Stamp duty exempt up to $500,000; sliding scale to $650,000. Flat $10,000 duty discount for homes worth more than $650,000 

Tasmania

Grants

Name: First Home Owner Grant

Eligible price point: No threshold

Eligible properties: New homes

Amount: $20,000 until June 30, 2017 and $10,000 from July 1, 2017

Stamp duty concessions

None available

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