Am I making a poor investment decision for passing up the chance to avoid stamp duty in the ACT?

Hi all,

Looking for some advice.

We are looking to buy our first property in the ACT. Have 200k deposit which we are adding 5k to a month. We are after a free standing home as close to the city as we can get for below 850. I'm driven by finding good land/location rather than getting a new whizz bang dwelling.

We are eligible for stamp duty exemption this fin year due to personal circumstances that won't be repeated.

Weve just missed 2 houses in the last 2 months, there are a cpl of things on the market atm we don't mind but don't love. Two months out from fin year it's crunch time so I'm tossing up between 2 roads.

1. Go hard on getting something before the end of fin year to save the ~25k we'd be paying on stamp duty. Trade off is we have a house we like but aren't crazy about

2. I think the market will take a small dip (5%) towards the end off the year so by waiting we will have more time to pick something, save the more than the price of stamp duty on a house price anyway, and potentially save even more if the market drops in the range of 10%. Trade off is we lose 25k cash up front.. Would probably prefer to pay thst 25k off over a longer period of time.

After the thoughts and opinions of some more experienced heads.

Cheers

 

I should mention this will be a PPoR.

 

The conflict for a FHB - you won't find your forever home but you could find the best location with a crappy/not quite optimum house. The latter can be fixed, the former can't be changed.

 

Yep and we're absolutely happy to give up ground on the dwelling. When I say things we don't love they are things we can't change e.g street, dwelling location on block or bones.

Any thoughts on the trade off with stamp duty v not?

Cheers.

 

You should keep looking and see what happens. If you find what you want, great. If you cannot find what you want, wait.

Don't bank on a big drop in prices in Canberra. Any that do happen will be fleeting and temporary IMHO. By the time lockdown restrictions let up, I imagine we will not take long for the Canberra market to go back to normal. There are a lot of people, like myself, who were going to sell, but who have no urgent need; who decided not to put their houses on the market until after. And once I lock in a tenant, I won't be coming back to the market until I can get them back out again for vacant possession. The only way you get a price drop is if you have motivated sellers who need to sell and only a limited number of buyers.
Canberra is a very insulated market, interest rates will remain low for quite a while, and there is nearly always strong demand. I cannot see that changing. You are more likely to see a dip sooner rather then later, and it won't take long to correct again once things return to 'normal'.

 

I would take the path to get the most ideal house.

I'd rather have the house that I liked, than the house that I kinda like
but got a stamp duty exemption on.

The better property should also give a better return over time.

The other option is to rent it out short term and claim the deduction. Might work if the place needs a paint/refresh.

 

I agree with you. Gazing into my crystal ball I see a small decline in the ACT but nothing like other states. I'm also not seeing any growth for a while after that either, so I think there is a medium term window to watch and be more selective.

I think there was a big enough jump at the start or the year and coupled with current conditions I'm not anticipating growth for 12 months at least.

 

In your shoes, I'd wait and find exactly what we're after. A 5% decline on 850 is 42k.

 

As it's your PPOR - I would suggest you take your time to pick the property that you guys like/love and negotiate hard. If it doesn't fit the criteria or your price then keep moving on. Don't rush it just because government incentives is about to expire.

Cheers,
David

 

Well think of it this way. When my ex husband and I bought in Canberra we decided to save money by buying a townhouse rather than a house. It the 12 years we held it it only went up $150,000. If we had bought the house we looked at instead for around $50,000 more, we would have made $300,000 instead. Definitely should have bought the house!

 

Buy the place you love and you may never want to move.

If you trade off location etc, you'll feel it every day.

For instance, I grew up in a suburb that wasn't good for train transport. My dad would drive to a train station every morning, battle traffic (that would only get worse over time), park the car and then walk to trains. The primary schools there weren't crash hot either.

Later, they (my parents) moved to a place that wasn't so far away, but socioeconomically superior, had direct fast buses to the city. Ok, it was a more expensive location, but my mum was so much happier.
They are still there.

Me, we bought an ok house in a great neighbourhood, (brilliant neighbours), nothing wrong with the house but then later saw the place we loved, and managed to buy it!

We still love it, and I'm so proud we own it, it reminds me every day. Anybody who visits it just loves it too. Awesome garden, awesome green outlook, lovely birdlife, so much history, heaps of space, so convenient... just love this place

Of course, it wasn't something we could afford as a FHB, so it was an upgrader, but if you can afford to buy the place you love, do it.

Homes cost a lot of money, and it's something you want to get right.