BREAKING NEWS: Massive Stamp Duty cuts in Victoria for first home buyers

The Victorian Government has just announced that from 1 July:

* First home buyers will pay no stamp duty for properties purchased for up to $600,000;

* First home buyers will pay significantly discounted stamp duty for properties purchased between $600,000 and $750,000; and

* "A $50 million pilot program will also give about 400 people the chance to co-purchase a dwelling with the government, which will offer to take an equity share of up to 25 per cent for each property – in turn reducing the deposit that a first home buyer would otherwise pay.

The so-called "HomesVic" program will begin in January next year, targeting couples earning up to $95,000 and singles earning up to $75,000. Buyers will need a 5 per cent deposit to be eligible, and when the property is sold, the government will recover its share of the equity."

 

Good deal for the first home buyers in Victoria and hopefully one less reason for some people to stop whining about their inability to enter the market. Do you think homes below the $600k amount may go up artificially due to this scheme?

 

yes, especially new regional property in areas like Gisborne Geelong and wallan which also benefit from a $20000 FHOG.

 

This is a great initiative by a government which is so frustrating in how it's on the one hand so annoying yet has now done quite a few things that will certainly help the regions, and Geelong hopefully will be front and centre with these initiatives.

The removal of stamp duty puts at least 80% of Geelong's properties within that sub 600K mark, and the $20K FHBG as well, that means if there's genuine people who want to get in with only moderate income, a New Norlane place could be accessed for about $220K i'd say of loaned funds. Those places would offer an ideal chance to get into the market. Obviously homes in other areas too would be more of a possibility, but very few of these would be getable without at least a reasonable deposit of one's own funds to kick it off with.

I just hope that people see past their noses and look at what this can do to get on the property ladder, people seem to forget this is a FIRST home buyers grant, not aimed towards being the ULTIMATE home one may aim to buy....a frustrating amount of people seem to overlook the cheaper suburbs of a city like Geelong as a place to buy, forgetting that all the amenities of this city are as available to someone living in Norlane as may be in Leopold, Armstrong Creek or even Curlewis and the like. I keep harping on about it, but you get a lot of infrastructure buying here, and you're near to a major city. And not too far from Melbourne too.

Good stuff from the government.

 

Yes, quickly front run them by buying up first home buyer stock and sell it to them after July 1st at inflated prices.

So dumb of government to telegraph these changes ahead of time.

 

So looks like all outer suburbs are about to get some quick additional growth.

 

Queensland should take notice and follow suit.

 

Why?
Property is pretty cheap there already

Not sure if this scheme is a good or bad thing. Obviously it could be a short term win for investors and allows people to buy a home by saving far less.
However as some have already said it will likely have the effect of pumping up prices. Especially in new estates.
This same thing happened in 2008 i think and the housing estates went from 350k to over 400k very quickly.
A lot of them dropped back after the boom though
My fear is that the vic gov is doing this to stimulate poor economic growth and this may just make our housing bubble a little juicier.

Also remember they are releasing an extra 100,000 blocks in outer melbourne in the next 18 months so this policy might be used as an artificial price support

 

I don't agree with the price rise fear. I got my place in 2009-10 when there was both a federal and state FHBG, it was huge, and the only way i could get a property, $36500 for my new build 3-1-1 on a half size block that cost $260K. That was about the going rate for a new build by and large anywhere in Geelong, probably more on land in more esteemed suburbs than Norlane.

But even now, 2-1-1's in Norlane are available for $240K (i think that included the $10K FHBG).

Plume Street, Norlane VIC 3214 - Off The Plan House - 2013321118

And my place has probably only crept up to around the $300K mark now in that time. Certainly in my area, those new build prices have not taken off, and even other places have only started moving off a low base anyway. Perhaps in other places, but being regional i think the fear of price rises is unfounded.

 

Buy a fho house now and pay stamp duty, then flip it later for the inflated price of stamp duty.. don't think so.. once you factor in other buying/selling costs you are more likely to lose money. If there is any profit, it would be so slim with no cgt discount. Not worth the risk..

 

Dave
What i was trying to say is that prices rose teporarily while the scheme was in full swing and then when it was taken away the house and land prices magically dropped.
Developers pump up the price because people can buy with very little deposit
I think its dangerous to pump prices like this in outer suburbs and release 100,000 new blocks
What happens when the scheme ends? Lot of people on negative equity would be my prediction.

 

Perhaps, my comment was semi tongue in cheek, but look at the effects of the first home buyers boost 7 years ago. You need to understand that prices can be inflated much greater than the nominal price of the benefit, due to the use of leverage e.g. remove the upfront cost of stamp duty and it has the potential to increase their buying power by [stamp duty x 5 / 10 / 20] depending on whether they use it to stretch to a higher purchase price and LVR (and of course assuming they have the serviceability).

 

I'd understand that more in places like Armstrong Creek where there is lots of land and plans to build a heap of houses. Norlane is pretty limited, indeed there's only infill available, although there's a land release in the wedge between the Ring Road and Mathews Rd Lovely banks.

I guess my thought is that you'd think those who are struggling to get into the market might be attracted by the prices Norlane offers for a new house versus other new estates in the Geelong region. I think there's a bit of a snob factor with some new home buyers who feel that their first home should be their best and ultimate home, rather than a foothold or stepping stone into the market. Not sure that's a mindset that existed maybe 30 years ago or more.

 

@sash this news should excite you. How much will your portfolio grow now? Add 5-10%?

 

I guess nowadays with inflated house prices, for a FHO, their first home is probably gonna be a much bigger commmitment than it was 30 years ago. Monthly mortgage payments were probably much less as a percentage of monthly pay hence cant really blame them if they wanted a really nice place.

Somehow get the feeling that the next step after this stamp duty relief will be an ongoing land tax ;D Canberra has got to make up for the shortfall in the budget deficit somehow...

it will probably take much more than this to make up for the thousands of empty apartments that will have prices slashed for sale to those FHOs

 

Yep...Geelong is now going to the next step....

I would say at least another 15-30% in the next 2-3 years.......this is a great.....it would push first home buyer market ...which is traditionally....outer suburbs.

I feel the affordability peg in Melbourne is around 450k...it is lower than Sydney due to their very high stamps....on 450k...Melbourne people 23k vs 14.25k.........so this recent announcement should even things out.

You will also see now Melbourne pull ahead of Sydney as ....Sydney's property market now withers....will be interesting what the Qld govt does now...

 

Yep will definitely push prices up in outer burbs. If other states follow I would say @Kangabanga makes a great point, regarding land tax on family homes might be introduced.

 

What would those 2-1-1's rent for in your neighborhood p/w Dave ?

 

It's great for those that own sub $550k properties in Vic as they are likely to see at least a 10% increase in prices over the next 12-18 mths. Particularly as it applies to established property as well.

Stamps for First Home Buyer on established $550k property is approx $14k which had to come out of their savings. Now with $0 stamps, subject to servicing, this can be leveraged by a factor of 4 or more as it can be included in their 20% or less contribution meaning their will be more competition and ability to pay an extra $50-$70k for the same property which over 12-18mths I think they will.