Will the NSW pause on stamp duty push up property prices?

Experts point to a possible spike in first home buyer demand

Will the NSW pause on stamp duty push up property prices?

Experts say the NSW pause on stamp duty for first home buyers purchasing new properties worth up to $800,000 could result in a temporary spike in demand. MPA spoke with Mortgage Choice CEO Susan Mitchell and buyer’s agent and author of Positively Geared Lloyd Edge about the winners and losers of the scheme and how brokers can leverage it to create new opportunities.

How much are first home buyers likely to save?

According to Edge, the pause on stamp duty for new homes worth up to $800,000 and vacant land worth up to $400,000 will come as a huge boon to families outside the Sydney region.

“This is another helping hand for first home buyers alongside the existing grants and benefits already on offer such as the First Home Owners Grant, Home Builders Grant, and the First Home Loan Deposit Scheme.”

“Not only that, but builders and tradies will see a huge boost in construction and the economy as a whole will benefit from the job creation and a decrease in unemployment rates.”

He adds the major loser of the scheme is the NSW Government, which is set to surrender up to $194m in revenue if an estimated 6,000 first home buyers benefit from the pause.

Upward pressure on property prices

Because so many first home buyers stand to save up to $32,335, a surge in demand from this segment could temporarily push up property prices.

“In the major centres, such as Sydney and Wollongong, this wouldn’t have much of an impact, with the majority of land and the price of new homes far exceeding the thresholds.”

“In the smaller towns and regional centres, however, this may temporarily inflate prices as buyers rush to buy before the 12-month deadline.”

“This may also be a catalyst for city dwellers to make the ‘tree change’ to a regional town,” he says, adding that flexible working arrangements struck during COVID-19 could help more city folk move to the country.

A surge in first home buyer demand

According to Mitchell, those in the outer suburbs of Sydney could also be winners under the scheme.

“First home buyers who meet the eligibility criteria and want to enter the property market sooner stand to have big gains.”

“First time buyers who were in the market looking for a property will be more encouraged to put their plans into action.”

She says the property market is likely to experience a temporary surge in first home buyer demand in NSW within regions where newly built homes or vacant land fall under the criteria.

The opportunities for brokers

Mitchell says, with the pause likely to push those buyers who were sitting on the fence into action, now is the time for brokers to reach out to clients.

“I encourage brokers to actively target their database of prospective first home buyers, whether that’s by email, social media or old-fashioned phone calls.”

Edge agrees, adding that education will be a key decider.

“The brokers who will rise to benefit from this pause in Stamp Duty are the brokers who are on the forefront to educate their clients and seek opportunities to make the most of their clients’ savings.”

“Brokers who are able to really crunch the numbers and provide evidence to buyers on how they can benefit will be the ones who will start to seal the deals.”

While the scheme will give thousands of first home buyers a helping hand into the property market, Edge says brokers and buyers should tread with caution.

“Everyone gets excited when they are given a leg up onto the property ladder, however with the 12-month time restriction for the deals, it is more important that buyers buy the right property and not just rush into a deal to meet the concession.”

“The benefits of purchasing the right property and having the right finance structure for a client will far outweigh the benefits from any concession in the long run – because doing the right thing by a client will prove to be your best referral network.”