NSW considers pay-as-you-go stamp duty plan
First home buyers in New South Wales could be allowed to pay off their stamp duty over several years under a proposed scheme designed to kick-start the property market.
The Real Estate Institute of NSW's (REINSW) pay-as-you-go plan would see buyers pay off their tax bill over three years. The group says the government would be "protected", with stamp duty guaranteed against the property in the same way as unpaid land tax.
The proposal comes at a time when state and federal governments are busily reducing the amount of cash support being given to first home buyers, either by reducing grants or limiting stamp duty concessions.
In NSW first-time buyers now only have the benefit of the original $7000 federally-supplied First Home Owners grant when buying a pre-existing property.
State treasurer Mike Baird said a pay-as-you-go stamp duty scheme for first home buyers was "an interesting idea" that was being considered by the government.
First home buyers still absent
Despite an increase in first-home-buyer activity in recent months, first home buyers largely vacated the field in the past two years, according to RateCity chief executive Damian Smith.
"Just 7800 first-time buyers entered the property market on average per month last year," he said.
"In 2008-09 there were over 172,000 first home buyers in Australia. In 2010-11 there were around 90,000 – a fall of over 80,000 buyers, or over $24 billion of borrowing."
A slow home loan market means lenders are hungry for more business and many are still willing to negotiate on rates and fees, according to Smith.
"Despite rising funding costs, the biggest single issue for lenders is a slow market; they desperately need to kick-start lending. That's good news for first home buyers, but only those with solid deposits, a good track record of savings and the knowledge and tools to shop around."
But prospective buyers are being urged to do the sums before rushing into the market.
Aussie Home Loans' John Symond said: "I think you've got to be careful. Young, inexperienced buyers can easily get over their heads".
Why wait? Buy now with little deposit
Mixed bag for Australia's building industry