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NSW budget boost for property buyers
Three key items – shared equity scheme, stamp duty reform and infrastructure spending – announced under the recent New South Wales (NSW) state budget aim to boost property ownership.
It is still early days and it remains to be seen how these initiatives will be successfully implemented. And whether they can ultimately address the issue of home ownership or not is still debatable.
In this video, Wealthi co-founder Domenic Nesci highlights the major components of each initiative and how will they benefit potential homeowners and property buyers.
Shared equity scheme
At first glance, Domenic says he likes the shared equity scheme where the government will contribute 30-40 per cent of the price of the property.
“This (shared equity scheme) is a big thing for property buyers as it will allow people to get into the market with a small deposit. The government will act as a ‘silent partner’ to let people own a piece of property earlier than they could normally do,” Domenic says.
Under the shared equity scheme, eligible property buyers can tap into the $780.4 million allocated by the NSW State government for this program.
The scheme will see the NSW Government contribute an equity share up to 40 per cent for a new property or up to 30 per cent for an existing property purchased by eligible buyers.
Stamp duty reform
While the details of the stamp duty reforms are different from what was originally proposed, Domenic says the initiative is still significant for property buyers.
Under the new First Home Buyer Choice package, from 16 January 2023 first home buyers will be able to choose between an upfront payment or a smaller annual property tax of $400 plus 0.3 per cent of the land value of the property on homes valued at up to $1.5 million.
“This can be a big boost to a certain segment of the market – first home buyers. Paying a land tax based on the unimproved value of the land is typically much less than what you would pay (for a property) at market price,” Domenic says.
“And this is significant. If a property sells for $2 million, you will be paying 4% in stamp duty. But if you go by the unimproved value of the land, it could be only around $500,000, and that is a huge difference.”
Investment in infrastructure
At Wealthi, we believe that access to and availability of infrastructure is a major factor in property price growth.
“When the government or private sector spend money to improve a location, people want to move there or want to live in that area. That’s why we see infrastructure as critical to an area’s or region’s growth,” Domenic says.
Here are some major infrastructure projects announced under the NSW budget:
· $274M for the fast rail program that will provide fast connection between Sydney and Canberra. This is expected to boost property prices in areas that will be served by the fast rail.
· $2.4 billion for regional areas where the government will provide incentives including healthcare and education services to encourage population growth. Regional areas will see more hospitals, schools and will get more healthcare and education professionals.
· $3.2 billion to upgrade the Great Western Highway to reduce traffic congestion in the Blue Mountains and central west region.
· $5B dollar for the West Invest program that will fund transformational projects such as streetscapes, playgrounds, school upgrades and other amenities to encourage community activities.
· $2.3 billion to extend M6 and aims to remove 2,000 trucks along Princess Highway
We believe this new budget presents big changes and opportunities for the property market in Sydney and Regional NSW; however we don’t see at the moment the Sydney market as a prime location for our investors.
If you would like to discuss the Australian property market in more detail and find out where are the 3 top growth hotspot reach out to the Wealthi team: