FIRST HOME BUYER BOON
It’s about to be even easier for first home buyers to get into the local market and the news is good for vendors as well who can expect to sell mid-range properties quickly.
The teams at James H. Monk Real Estate and Fennell West financial advisors are expecting the Government’s latest first home buyers scheme to make the local area more attractive for young people to live, work and invest.
A total exemption from stamp duty for first home buyers who purchase a house valued at $600,000 or less was recently announced by the Andrews Government. Currently, the Government only offers a 50 per cent reduction in stamp duty for first home buyers.
The other change on the way is an increase from $10,000 to $20,000 in the First Home Owner Grant for people who build new homes in regional Victoria up to $750,000.
James H. Monk Real Estate director Davina Pickles said the local market was already quite buoyant and she expected the new scheme to strengthen it further.
“In the past these schemes have had a positive effect because they mean young people, in particular, don’t have to have as much money saved to get into the market,” she said.
“The local market is already good, but we can see it getting better with these incentives. If people aren’t able to break into the market at present, this might just make it attractive enough for them to take that step.”
Fennell West financial adviser Jarrod Owen said both the stamp duty exemption and the grant to build a first home would come into effect on July 1.
“If someone buys their first home for $250,000, they’ll save about $10,070 in total when stamp duty is waived. Under the current first-home buyer duty reduction they save $4,435 – so it’s an extra $5,635,” he said.
“We’re also seeing at the moment there’s more and more people deciding to build their first home – particularly in new subdivisions where it’s possible to buy and build for less than $350,000.
“With new homes there’s no stamp duty, so first home builders who sign contracts from July 1 will now get a grant of $20,000 instead of the current $10,000.”
Mr Owen said in addition to the immediate saving the new scheme would offer, there were ongoing benefits of borrowing less money and having more equity in a property.
“The important thing to bear in mind for first home buyers is that the scheme will mean they will have more equity, which will result in less borrowings,” he said.
“This will not only reduce the overall interest having to be paid on the loan, but it could also reduce or eliminate the potential lender’s mortgage insurance costs, leading to further savings.”
Mrs Pickles said combined with low interest rates, the changes to the first home buyers scheme had the potential to turn more renters into home owners.
“The market has generally been quite buoyant over the past six to eight months,” she said.
“With interest rates being low and stamp duty being waived, the average repayments on a $250,000 loan would be very similar to current rental prices for the same property.”