The Real Impact of Stamp Duty Exemptions?

The response to the recently announced measures to abolish stamp duty for first home buyers for properties up to $650,000 in NSW, from 1 July 2017, have been mixed. While most agreed that such measures are welcomed, the true impact on supply and demand is yet to be seen.
But for first home buyers entering the market with a deposit of less than 20%, looking at a $600,000 new dwelling. Savings of up to $34,361 can be achieved according to the NSW Government website.

This translates to, either a $34,361 reduction in cash required at settlement, or, saving around $115 per month in repayments by having a smaller mortgage. (Depending on how the loan is structured). Nothing to be sneezed at!
Some real estate agents have even reported that buyers have pulled out of deals to wait for the exemptions to kick in on 1st July, with the aim of big saving. But some warn this could be a risky strategy as the prices are predicted to rise by the amount of the stamp duty savings, due to increased demand.
To get a local perspective in Sydney, I spoke to Sandro Musumeci of Better Buildings Realty in Parramatta, who’s client base consists of many first home buyers, and many listings in his book for apartments around the $600,000 mark…

  • Q (Alan): Did you see increased demand from first home buyers since the stamp duty concessions were announced?
  • A (Sandro): Since the announcement two weeks ago, my agency has definitely seen an increase in enquiries from first home buyers across all properties, both new developments and existing stock.
  • Q (Alan): Have you seen any buyers pulling out of deals to wait for the stamp duty concessions to kick in?
  • A (Sandro): We haven’t had any buyers pull out of deals, but have experienced buyers submitting offers on property’s, but are telling us that they will not exchange contracts until the 1st July 2017, in order to save on paying the stamp duty.
  • Q (Alan): What do you personally think is going to happen to supply/demand and prices of properties after 1 July as a result of the stamp duty concessions?
  • A (Sandro): I think in the last week of June and the first week of July, we will see an increase in demand and supply. There will be an increase in first home buyers as a result of the stamp duty concessions, and we will see an increase in properties being offered for sale as owners would like to take advantage of the increase buyer activity and also being the start of the new financial year.
  • It is often said whenever there are changes in the real estate market such as the ones recently announced, property prices are going to ‘increase’ as owners expect more as a result of buyers saving money on stamp duty. While it is still too early to state whether this will occur, it will definitely be interesting for all those in real estate to monitor over the coming months.
Such insights from the field are certainly valuable and it would be interesting to see how things play out in the coming weeks. Leave a comment with your thoughts or observations…
If you like some help with financing options and see how the stamp duty concessions may help your entry into your first home, please get in touch and let us help you explore your options.
For detailed information on the stamp duty and other concessions, refer to: ​First Home Buyers
Special thanks to Sandro Musumeci of Better Buildings Realty for his contribution to this article.

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