Brokers welcome SA stamp duty changes for FHBs

Among the measures is a new stamp duty exemption for first home buyers purchasing a new home or vacant land to build a new home.

A full stamp duty relief applies on the purchase of an eligible new home valued up to $650,000, with the relief progressively phasing out for properties valued up to $700,000.

For the purchase of vacant land on which a new home will be built, full stamp duty relief applies for vacant land valued up to $400,000 with the relief phasing out for land valued up to $450,000.

Moreover, the state government has increased the property cap for those wishing to access the $15,000 grant to buy or build a new home (including houses and apartments) in South Australia.

New homes (homes that have not been previously occupied or sold as a place of residence) valued at $650,000 or less will now qualify for the First Home Owners Grant (FHOG), up from $575,000.

The South Australian government said this aims to “reflect the significant increase in land and build costs and more closely aligns the FHOG with Adelaide’s median house price of $675,000”.

According to the state government, the moves could assist around 3,800 first home buyers each year.

Speaking of the changes, Marissa Schulze, managing director at Rise High Financial Solutions, told The Adviser that she thought South Australian first home buyers “will be thrilled” with the news that stamp duty will be abolished on new homes up to a purchase price of $650,000 or vacant land up to $400,000.

“Stamp duty is a large upfront cost and it can be a major barrier to getting on the property ladder for the first time,” she said.

“The introduction of the new rules on 15 June 2023 could mean that FHBs would need to save up to $30,000 less towards their deposit.

“In the current economic environment with rising costs of living, this could make the difference between getting into the property market quickly or having to continue renting for a much longer period of time.”

The Rise High Financial Solutions MD said that the brokerage expected the new initiative to boost the housing market in South Australia.

“The new rules are aimed at those looking to buy brand new homes or vacant land which will be a great stimulus for the construction industry and lead to increased job creation around the state,” Ms Schulze continued.

However, she warned that the move could lead to higher property prices, noting that “this particular price range (under $650,000) is definitely in hot demand at the moment”.

“Increased demand can often lead to increased house prices,” she said, but concluded that the move was net positive for FHBs and the housing and construction market in South Australia.

Similarly, Sam Walker from Aussie Prospect said he believed the changes would benefit FHBs overall.

Mr Walker noted that a substantial proportion of his business was from first home buyers (with an even split between those buying existing stock and those buying house and land) but that the number of FHBs in market had fallen since the closure of the HomeBuilder scheme.

Indeed, he told The Adviser that many of his recent clients “had been having issues” finding properties under the current FHOG threshold of $575,000.

However, he said had been receiving strong inquiry from FHBs regarding the changes immediately following the budget announcement last week.

The South Australia-based brokers said that the move to increase the FHOG property cap to $650,000 and scrap stamp duty for these new homes “will allow more people to access the first home owners grant”.

While the broker conceded that any stimulus could have an inflationary effect on the prices of qualifying homes/parcels of land — and on the ability of home builders to deliver these properties on time — he added that he had been working hard to ensure clients had “a realistic expectation of delivery times”.

Mr Walker concluded: “I think it’s only going to be a positive thing, if it allows more people to get into the property market earlier and therefore home ownership becomes more affordable.”

As well as the FHB measures, the South Australian government also announced a land tax reduction for eligible build-to-rent projects on South Australian land will be available where construction commences on or after 1 July 2023.

This relief applies as a 50 per cent reduction in the land value of relevant parcels of land, where the land is being used as an eligible build-to-rent project.

The land tax reduction will be available from the 2023–24 financial year up to, and including, the FY39-40.

Several other states have announced similar changes to stamp duty and land tax recently.

The state government of Victoria announced plans to abolish stamp duty for commercial and industrial properties, while NSW moved to scrap the annual property tax option and instead introduced new legislation to lift the threshold for stamp duty exemptions and bring in concessions for FHBs.

[Related: Vic stamp duty change should ‘pique interest’ in commercial property]