Stamp Duty Exemptions For First Home Buyers

With stamp duty exemptions kicking in on July 1, now is a great time for first home buyers to do their research and identify suitable suburbs and property types. The good news is that you can still get a foot in the door of Sydney’s popular eastern suburbs and inner city if you are willing to make some compromises.

Last month, the NSW Government announced a major housing affordability package, which most significantly abolished stamp duty for first home buyers on both new and existing homes worth up to $650,000. To be introduced from July 1 2017, this translates to a saving of about $24,740. Stamp duty discounts will also apply to properties worth up to $800,000. In addition the package, designed to boost first home buyers while hitting foreign investors with the highest fees in the country, will also:

  • provide a $10,000 grant for builders of new homes up to $750,000, and purchasers of new homes up to $600,000
  • abolish insurance duty on lenders’ mortgage insurance
  • introduce a foreign investors surcharge on stamp duty doubled from 4% to 8%, and land tax surcharge from 0.75% to 2%
  • no longer allow investors to delay paying stamp duty for 12 months on off-the-plan purchases.

This year’s budget also introduced the First Home Super Saver Scheme (FSSH) designed to give a helping hand to first home buyers saving for a housing deposit. From 1 July 2017 individuals saving for their first home will be able to salary sacrifice contributions to superannuation which along with associated earnings can be withdrawn from 1 July 2018 to fund a first home deposit.

The Reality of the Sydney Market

So while this all looks good on paper, will it actually make a difference to those wanting to buy in Sydney, where property prices remain high even though there are some signs and predictions of a cooling market?

According to The Sydney Morning Herald and Corelogic data, about a quarter of all residential properties sold in Sydney in the past year would have attracted the full stamp duty benefit, while about 40 per cent would have attracted some concession.

At that $650,000 price point, houses are definitely off the list but according to a comparison website which used Corelogic data on sale prices, there are 36 suburbs which have enjoyed median unit sale prices of under $650,000 over the last 12 months. These included Kogarah and Eastlakes, with median unit prices of $603,000 and $598,500 respectively, while the cheapest suburbs to buy a unit were Belrose, Lakemba, Wiley Park, Punchbowl and Roselands which all had median unit prices below $500,000.

Eastern Suburbs and Inner City Options

Surprisingly there are there still options for first home buyers in the inner city, inner east and south east for those wanting the latte lifestyle and accommodation closer to universities and Sydney’s CBD.

Cohen Handler Associate, Riki Tawhara specialises in property in the eastern suburbs and inner city and said that for first home buyers it was still possible to find a decent sized one bedroom apartment with parking in pockets of popular suburbs such as Kingsford and Kensington for $650,000.

In Surry Hills, the options at the lower price range would be a smaller one bedroom, one bathroom without parking but with the advantage of being in the heart of everything. Further over in Ashfield and Summer Hills, Riki suggested that first home buyers may be able to pick up a small two bedroom, one bathroom Art Deco apartment but once again without parking.

According to Riki, the feedback from first home owners on the new initiatives, particularly the stamp duty exemptions had been overwhelmingly positive and he also believed it was a wonderful boost for those entering the market.

“It’s particularly good for any first homebuyer who is about 80–90% ready to buy but who still needs to save a little bit extra. By saving around $25,000 on stamp duty, it means they can buy sooner and have some money up the sleeve for immediate touch-ups and minor renovations.”

8 Crucial Things First Home Buyers Need to Know

Riki’s best tips and experts insights for those wanting to enter the property market include:

  1. Have back-up suburbs and areas where you are willing to live. Don’t be fixed on one particular suburb, street or building. It would be difficult to find a property that ticks all the boxes in a first buyer’s price range so you need to be willing to compromise.

“While your first choice may be Surry Hills, if you are open to other areas, say for example Maroubra, you will get parking and a bigger block, and it will be a much better investment… Stock levels are currently low and the longer you fixate on one area without buying, the more the market moves and you may even find yourself with the option of a studio instead of a one-bedroom apartment.”

  1. Remain open to renovating and adding value through a basic cosmetic renovation. You may be able to pick up an ugly duckling apartment and not pay a premium for it. Further down the track a revaluation may result in being able to use the equity towards the renovation.

“Don’t hurry the renovation – live in it, enjoy it, you’ve earned it. Perhaps start with the bathroom and renovate according to your budget.”

  1. Be confident in your dealings with real estate agents. Investors seem to be steering clear of the lower price range so chances are you will be competing against other first home buyers. Learn about the real estate agents and agencies in your chosen area, e.g. do they take everything to auction?; are they open to pre-auction offers?.

“There is a lot of stock off-market or pre-market and if you foster a good relationship with an agent, they may give you a heads up on those properties.”

  1. Understand valuations and “don’t burn bridges” with the real estate agents. While a price guide may say $600,000, there is little point in making an offer of $520,000 when it will probably go for $700,000. An agent will be more likely to call you back and engage with you if you make strong realistic offers.
  2. Avoid auctions. You can’t control an auction so wherever possible steer clear of them or engage an expert to help you bid.
  3. Do you due diligence. Find out if any major projects are in planning that may be either positive or detrimental to the value of the property.

“This is not a game you learn on the job. In inner city Sydney, you are dealing with some of the best agents in the country on the biggest transaction in your life. As a first home buyer, you have a big bullseye on your head so due diligence is key.”

  1. Become educated on the buying and selling process. When you are ready to make an offer, make sure you tick off the crucial elements, such as a building report, reviewed and signed contract, a 66W certificate (to waive cooling-off rights), finance organised and deposit cheque ready to go. Otherwise any offer, even a serious one, won’t gain you leverage and the real estate agent may simply shop your offer around to other interested parties.
  2. Use a Buyer’s Agent to level the playing field. It gives you someone whose interests lie wholly on your side.

“Having a sounding board is a really big help. When you are a first home buyer, it’s natural to second guess everything. A Buyer’s Agent guides you throughout the process, answering your questions honestly and making sure you get the best price possible.”
With July 1 being just around the corner, now is a great time for first home buyers to do their research and identify the areas that they can afford and where they would be willing to live.


Cohen Handler Buyer’s Agents can assist first home buyers with sourcing property that is within their price range in preferred areas. We can also recommend areas that currently offer good investment opportunities across Sydney. Contact us now.

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