The NSW Government introduced the First Home Buyer’s Grant Scheme back in the year 2000. The $7000 cash bonus is nice, but it is the stamp duty concession that really helps out. The stamp duty calculator shows that the duty on a $500k home drops from $18,170 to a tiny $180 if you are a first home buyer, a huge saving of $17,990. This saving deteriorates pro-rata however as the price of the home approaches $600k, at which point it becomes unavailable. Means testing by this method is all well and good, as long as the means test is indexed. Back in 2000 property prices were significantly lower than they are today, as shown by the Reserve Bank’s own property price index graph from the May 2008 Regional Economic Performance Report:
This graph clearly shows that property prices have at least doubled in every state in the last 8 years, the same time period the grant scheme has been running. For 8 years of rapid growth the threshold has remained unchanged. NSW is actually the worst state for this, with an Age article citing:
Mortgage repayments account for 29.1% of total first home-buyer income, a one percentage point increase over the December (2007) quarter.
Adding to the cost of housing are taxes and charges, which added $110,000-$115,000 to the typical house and land package in Sydney, Mr Lamont said. In Victoria, that figure is about $57,000.
Surely the NSW Government should be keeping more of a finger on the pulse rather than making huge profits from Stamp Duty. The Federal Government is a little closer with their savings accounts, but $5000 a year is not going to get you a decent deposit anytime soon.