CoreLogic’s head of research Tim Lawless has warned that the NSW government’s decision to scrap stamp duty for first home buyers could have an inflationary impact on house prices.
Based on recent Australian Bureau of Statistics (ABS) data, first home buyers comprised only 8 per cent of owner-occupier mortgage commitments in March 2017 — only marginally higher than the record low of 7.5 per cent recorded in September last year and well below the long-term average of 17 per cent.
Mr Lawless said the decision last week by the NSW government to provide first home buyers with a stamp duty exemption for properties with a price tag under $650,000 is likely to boost demand for this under represented segment of the market.
“It’s widely accepted that policies aimed at stimulating demand tend to push prices higher; there is a possibility that the new policy could ultimately be self-defeating, increasing housing demand which could place further upwards pressure on the price of housing,” he said.
“From a positive sense, policies aimed at improving housing accessibility for first time home buyers are likely to be positively received. Sydney is Australia’s most unaffordable housing market by any measure, and for many buyers, the cost of entry, including stamp duty and raising a deposit, is the most significant barrier to entry. On a $650,000 dwelling purchase, a non-first home buyer would be paying stamp duty costs of around $25,000; so the exemption is a substantial cost saving for a first home buyer.”
In Sydney, where property prices have boomed in recent years, the latest CoreLogic figures put the median house price at just over $1 million and the median unit price at just under $743,000.
[Related: NSW government announces housing reforms]