It’s a week or so after the NSW government announced the scrapping of stamp duties for first time home buyers and over 65’s. What’s the deal with stamp duty cuts, and how does it benefit the trades and home services industry? Do stamp duty cuts actually make a difference?
Why were stamp duties cut for first time home buyers?
The first time home buyers market is ‘hyperactive’ and yet people buying their first homes are not buying newly developed properties. Banks have increased the amount of pre-sales required before they’ll lend money to builders for these projects, and so many projects lie dead in the water simply because the banks are more risk averse in the current market than they ever have been before. To revitalise growth, first time home buyers need incentives to own a newly developed property renovation and construction services in lahore.
This first time home buyers market is a strange one. It’s definitely not possible to assume that all first time home buyers are one and the same. But why are first time home buyers less likely to buy a brand new home than an established home? Here’s the top 5 common attitudes we’ve heard from first time home buyers:
– If I buy a house or flat, I have to choose between a cheaper, bigger place further away from the city and a smaller, more expensive place closer in.
– Most affordable new developments are on the outskirts of the city, so although I’ll win with stamp duty and initial price, I’ll pay more in travel over the rest of my life.
– Sometimes the difference between a new place and an old place is that the old place is cheaper because it needs work. And I can’t afford to do that work now, but the overall price is cheaper so it’s affordable to buy it now and fix it up later when I’ve progressed further in my career.
– Do I buy a small flat and live in it for a few years to get onto the property ladder short term, or buy what I want long term now where I can see having a family and living forever?
– If I buy a new development because I want the grant but don’t want the property long term, when I want to sell there might be lots of these on the market and they’re all the same!
The point is, often the choice for a first time home buyer is more complicated than just new vs old – and stamp duty cuts for new homes don’t offset some of the longer term effects that need to be considered.
But the good news is that whether first time home buyers are purchasing new properties or old properties to fix up, there is a benefit for the building trades. From the government’s perspective however, allocating grants to buyers of new homes over old homes has the almost the same effect – but brings stimulus and results far more quickly than the ad hoc renovations completed over the first few years of owning a ‘fixer upper’.
Why were stamp duties cut for over 65’s?
Seemingly, this is an altruistic move by the NSW government to help reduce the costs of downsizing for pensioners. But we can also see a lot more benefit for the government in reselling all those bigger, more expensive houses to someone who isn’t going to receive stamp duty cuts, and wonder if the overall effect in terms of budget will be a profitable one – less revenue because of the new sales attracting less stamp duties but far more revenue from the new, more expensive properties on the market. Still, whether the motivation is altruistic or not, if the stamp duty cuts should have a positive benefit for people if it does in fact motivate over 65’s to downsize.
Because one assumes that someone who doesn’t work is less influenced by proximity to the city than proximity to friends and family, effectively sales in locations further away from the central business district (and therefore less attractive to under 65’s) will be bolstered by those looking to downsize. This should lead to a more consistent new sales market across the whole state. But Rich Harvey (chief executive of Propertybuyer) was skeptical that over 65’s would want to downsize to a property of value less than $600 000. Any properties sold for over $600 000 are not eligible for the stamp duty discounts.
The results of this part of the stamp duty cuts remains to be seen, but as Jack Donaghy of 30 Rock says “Sometimes you have to change something perfectly good just to make it your own”. All property purchases can only be good for the trades, old houses or new, and Service Central is there to match the job to the best business for it!