Those purchasing their first home in NSW won’t pay stamp duty on properties under $650,000, while Victorian FHBs will pay no stamp duty on properties up to $600,000.
Like previous FHB schemes, the measures are expected to have an inflationary impact on the housing market at a time when Sydney and Melbourne markets are just starting to cool.
The latest CoreLogic Hedonic Home Value series shows that momentum of capital gains over the second quarter of 2017 is losing steam.
The June quarter results showed that capital city dwelling values were 0.8 per cent higher across the combined capitals index; the slowest quarterly rate of growth since December 2015 when the combined capitals index fell by 1.4 per cent.
“This trend towards lower capital gains across the combined capitals index is mostly attributable to softer conditions across the Sydney housing market, where quarter-on-quarter growth was recorded at 0.8 per cent over the June quarter; down from 5.0 per cent over the March quarter,” CoreLogic head of research Tim Lawless said.
“In contrast, the quarterly trend in Melbourne has been more resilient, with growth easing from 4.2 per cent over the March quarter to 1.5 per cent over the three months ending June,” he said.
The slowdown is largely being driven by regulatory measures imposed on the banks to slow investor lending. At their peak, investors comprised just over 55 per cent of NSW mortgage demand.
“A further slowdown in investment activity is likely to have a more substantial impact on housing demand in Sydney relative to other markets,” Mr Lawless said.
“There is a possibility some of the slack created by less investment in the Sydney housing market could be taken up by first home buyers taking advantage of stamp duty concessions that go live on 1 July, however if this is the case, it’s unlikely to be temporary as higher FHB demand could simply push prices outside the range applicable to the concession,” he said.
State government initiatives have no doubt been designed to give FHBs an advantage over investors and foreign buyers. Starting on Saturday, 1 July, Victorian investors will now pay stamp duty on the full value of off-the-plan properties, not just the land value as was the case up until last week.
Meanwhile, in NSW the surcharge on stamp duty for foreign buyers has now doubled to 8 per cent and the surcharge on land tax will increase from 0.75 per cent to 2 per cent.
Foreign developers will be exempt from the increased surcharges.
[Related: Foreigners to pay for FHB tax breaks]