The New South Wales government’s plan to improve housing affordability for first time buyers will only benefit 25.8% of Sydney buyers given the surge in dwelling values in the city, according to CoreLogic Inc.
That is based on sales over the past 12 months, Tim Lawless, head of research at CoreLogic.
On Thursday, all stamp duty for first homebuyers on new homes in NSW up to $650,000 was abolished. Stamp duty discounts applied after that, up to a limit of $800,000. Smaller stamp duty concessions also apply for those buying an existing home.
A study by Lawless puts the changes in perspective:
Over the past twelve months, 45.4% of dwellings sold across New South Wales had a price tag of $650,000 or less and 58% of dwelling sales had a price tag $800,000 or less. The proportion of properties that meet the exemption criteria falls away sharply if the analysis is confined only to the Sydney metropolitan area where 25.8% of dwelling sales over the past twelve months were at a price of $650,000 or less.
With a substantial premium on detached housing, the proportions are also substantially different between the broad product types. The past twelve months saw 20% of Sydney houses sell for $650,000 or less while unit sales comprised just over one third of all sales at or below this price.
This chart from Lawless shows what proportion of buyers can potentially benefit based on home sales over the past 12 months:
The limited benefit for Sydney buyers isn’t all that surprising given prices in the city have doubled since 2009.
And Lawless expects the latest measures could push prices even higher.
“It’s widely accepted that policies aimed at stimulating demand tend to push prices higher; there is a possibility that the new policy could ultimately be self-defeating, increasing housing demand which could place further upwards pressure on the price of housing which will exacerbate the affordability challenges even further,” he said.