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NSW Budget will create new problems
Released 23 September 2011



Penalising first homebuyers through changes to the stamp duty exemption from 1 January 2012, as announced in the NSW Budget last month, will have an adverse effect on affordability and supply.  

REINSW will be lobbying the NSW Government to rethink the changes, which we believe penalise the wrong people, will be very disruptive to the market and do nothing to improve supply.

While it must be accepted the government has inherited a problem with housing in NSW, which is not their doing, REINSW does not believe the removal of the first homebuyers stamp duty exemption for existing dwellings will do anything to solve the problem. 

Rather, the barrier to the supply of new properties to the market is developer taxation and other property taxes, including GST. The other problem in NSW is planning – it’s convoluted and expensive.

The changes to stamp duty exemptions are going to be felt particularly hard in some of our regional centres where the population is static. In those areas there is no demand or need for new construction, so first homebuyers have no choice but to buy existing properties and will be forced to pay stamp duty.

Homebuyers in regional and rural NSW will not enjoy the same choice as offered to those in metropolitan communities. What is needed is a special initiative that can reflect the unique needs of those living outside metropolitan NSW.

The changes will also be disruptive to the market because people contemplating buying their first home during the next 18 months are going to act now, before the 1 January 2012 deadline.

There will be a flood of first homebuyers before 1 January 2012, then the market will slow significantly.

The flow-on effects of the budget cut are serious for metropolitan, regional and rural NSW.

Housing affordability is one of the biggest issues affecting this state and unfortunately this is only going to make it worse.