State Budget Blues for First Timers
Do you remember buying your first home? The angst. The fear of the unknown. The endless advice from well meaning parents? That Agent, the one you were told not to tell anything, nor trust under any circumstance.
That house, with daggy wall paper and a dripping tap on a main road that miraculously you could just afford! Nothing’s changed, First Home Buyers (FHB) are still anxious and angst ridden. Except it just got harder.
The State Government has just rolled back the stamp duty exemption on established homes to $430,000, from the previous mark of $500,000.
This means that up to a $430,000 purchase price a FHB pays no stamp duty and pays a scaled amount up to $530,000 at which point they pay the full whack like everybody else.
So what does it mean? Well maybe, if like most FHB you are only just making the grade to purchase, you are going to have to make some tough decisions.
What do you really want? Does it need to be a house? Will a villa or an apartment do? Is proximity to public transport important? What can you save by keeping that car in the driveway? One less bedroom? Or as is likely will a larger percentage of potential FHB – become tenants for life?
Equally there is going to be some changes in some Perth real estate markets. Where a suburb median price was driven by FHB activity under the $500,000 there is going to be a negative effect on price. This compounds an already cooling market. And there will be a knock on effect to other areas as Sellers, who become Buyers have less to spend.
The other net effect of course is a change to the currently high metro (approximately 4%) rental vacancy rate. There is an expectation that vacancy rates will come down and rents increase. Great for landlords, too bad for struggling tenants.
It leads one to ask the question, will this State Government measure, to save money, actually have the opposite effect? How’s that you ask? Well consider this, any negative sentiment loaded into this real estate market against a back-drop of RBA jaw-boning on expected interest rate raises, is going to have a net effect of reducing home buyer confidence. This could actually affect the overall stamp duty take. I don’t do the economic modelling but it’s an interesting question.
So be prepared for the changing face of the real estate market as we have known it for some years.
Happy Mother’s Day.