Any move by the state government to axe first homebuyer assistance would ‘devastate’ first-timers and further squeeze them out the market, economic and property pundits say.
Fairfax Media on Saturday revealed the Andrews government is considering dumping the 50 per cent stamp duty tax concession offered to first homebuyers, or lowering the price threshold to access the discount.
The tax break applies to properties purchased under $600,000 and can save buyers up to $15,500 off their first home. The argument for cutting the concession is that the assistance only allows first homebuyers to pay more, which in turn further inflates prices.
But experts say the discount helps first-timers – who account for just 6 per cent of the Victorian market – compete with other buyer segments.
AMP Capital Investors chief economist Shane Oliver conceded such support increased first homebuyer purchasing power, which only benefited developers and existing home owners. ‘The one thing that’s working in their favour will be taken away.’ Dr Shane Oliver
‘That said, what we do have right now is first homebuyers squeezed to very low levels, struggling to get a foothold, and these measures give them a boost relative to other buyers,’ Dr Oliver said.
He said while axing stamp duty savings would reduce pressure on prices to some extent, it would also make life tougher for the buyer group that needed it most.
‘The one thing that’s working in their favour will be taken away,’ Dr Oliver said.
As well as axing stamp duty concessions, it is understood the government is also examining the $10,000 first home owner grant for newly built houses.
Domain senior economist Andrew Wilson said the Victorian economy was boosted by first homebuyer construction on the fringes of the city, and any move to curb that building boom would have a negative impact on the state.
‘There seems to be a growing trend of the Victorian government targeting property for tax revenue,’ said Dr Wilson.
He questioned the argument that first homebuyer assistance was putting pressure on the overall price growth because Melbourne’s sharpest rises were not in the budget first homebuyer market.
LJ Hooker Werribee/Hoppers Crossing director Adrian McEvoy said stamp duty was often the extra hit that kept first homebuyers out the market.
‘Adding $20,000 to a property $350,000 property out here does equate to a bit of money and it can make the difference,’ Mr McEvoy said.
Buyers advocate Cate Bakos said her clients would ‘quite devastated’ if either benefit was removed.
‘I can’t believe they’d even put that on the cards,’ Ms Bakos said. ‘The people who really need it will feel it if it goes.’
Planning Minister Richard Wynne denied any plans to axe the tax break ‘at this stage’.
‘There are no plans to change the arrangements that are in place,’ Mr Wynne said.