News & Advice.

Ever since the federal election buyers have been watching the market swing in their favour, with sweeping reforms announced in June’s NSW state budget tipping it even more so. First home buyers and those priced out of their desired places to live are now among those facing the rosiest buying scenarios in years. This is especially true given recent events: after COVID-19 took hold in early 2020 many new buyers had their hopes of ownership dashed by pandemic-induced economic pressures and then by property values soaring to record levels. 

But the current outlook could not be more different. In the most important property reforms since the introduction of capital gains tax (CGT) in 1985, the NSW budget has seen the introduction of two separate schemes that will allow thousands of first home buyers to turn their dreams into reality. These far-reaching reforms have created solid opportunities and our team of buyer’s agents is already helping dozens of average buyers find new homes. “With these changes, it is a perfect time to get into the market,” says Maker Advisory’s head of advisory Reece Coleman.

There are two major schemes targeting first home buyers. 

• The First Home Buyer Choice policy: From January 16, 2023, many first home buyers can elect to pay an annual land tax instead of the hefty upfront sum known as stamp duty. The choice will be open to first-time buyers purchasing a home up to the value of $1.5 million. This new annual land tax will involve a payment of $400 plus 0.3 per cent of the land value per year. It means for a home with a land value of $500,000 first home buyers would pay $1900 per year in property tax. “It’s a good opportunity for people to buy their first home in an area they may not previously have considered,” Mr Coleman says.
• Shared-equity scheme: One of the most significant elements of the budget’s $2.8 billion housing package, this reform is designed to help essential workers who may have been priced out of housing near their work as well as single households. It will allow 6000 frontline workers, single parents, and singles aged over 50 to buy their first home with as little as a 2 per cent deposit. At the same time, the NSW government will contribute 40 per cent of the equity for a new home and 30 per cent for an existing home. 

 “This plan allows certain types of workers such as doctors, nurses, teachers and police to buy in better areas and parts of Sydney and therefore reap greater capital gain down the track,” Mr Coleman says. 

The $780 million programs will be trialled for two years and permit 3000 applicants a year. Shared equity schemes already exist in South Australia, Tasmania, and Victoria, and Prime Minister Anthony Albanese has pledged to implement a similar scheme nationally. To be eligible, buyers’ gross household income must be no more than $90,000 for singles and $120,000 for couples.

The maximum value of the property purchased is capped at $950,000 in Sydney and large regional centres including Newcastle, Lake Macquarie, Illawarra, Central Coast and North Coast of NSW. Those buying in other parts of the state face a $600,000 property price cap.

“The Maker Advisory team are well-versed in the legislative changes,” Mr Coleman explains, “And we want to make it clear that we are here to help every type of buyer, whether you are a newcomer to the market or already on the property ladder. Using a buyer's agent is not just for multimillionaires amassing multiple properties.

“In the past week, we’ve taken on over 12 clients including first, second and third home buyers who want to take advantage of the government schemes and improving buying conditions.”

Locations opening up

Mr Coleman recommends first home buyers look at locations close to the city centre and transport such as Alexandria, Camperdown, Zetland and even pricier suburbs like Redfern and Surry Hills that they would not have considered in the past. 

“The shared equity scheme is a huge bonus for first home buyers, who may find with the government chipping in they can afford a better property,” Mr Coleman says. “For example with the government contributing 40 per cent equity, a first home buyer may be able to extend to a $950,000 two-bedroom apartment in Zetland. Without the contribution though they may be looking at buying only buying a studio.”

Speak to the experts

A major benefit of engaging a buyer’s agent is having expert advice on how best to navigate whichever scheme you choose. “These reforms are brand new so as buyer’s agents we can take all the guesswork out of the equation for the buyer,” Mr Coleman says. “We’re searching for properties day in and day out right now while helping all our first home buyers fully understand the changes and how they will benefit them.”

For instance, if a buyer were to purchase a property through the First Home Buyer Choice scheme and then intended to remain in that home for life, paying the one-off lump sum of stamp duty would be more cost-effective than opting for the annual land tax. “But if you’re young and don’t intend your purchase to be the first and last place you live then the annual land tax gives you the chance to pay less [than the total stamp duty] over the course of ownership.

“We are also advising new buyers that if they choose to pay the annual land tax they need to be cognizant of maintaining their cash flow so as to be able to comfortably pay the tax every year. One way of managing this is to put the money that you would have spent on stamp duty into a term deposit and draw down on this over the years. Or make sure you have an offset account.”

According to government estimates, the new schemes will see up to 97 per cent of first home buyers receiving some kind of support to enter the property market. So what are you waiting for? The time to move is now. Talk to Maker Advisory about your property purchasing plans today.