Is the state government finally getting the property market back on track? The NSW government is relying on a sustained housing led recovery to keep the budget in surplus. To see its plan come to fruition, the government realises that it needs to remove the barriers to housing development and improve the level of affordability in key areas of the residential market..
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The NSW Home Building Bonus (HBB)
The NSW Government is abolishing stamp duty for dwellings purchased off the plan, and making concessions for newly completed homes.
We enclose the NSW HBB Fact Sheet for your information, and we note the essentials for you below.
The HBB provides for full exemption for vacant land and off the plan purchases where building has not commenced.
A partial concession of 25% applies to completed new homes or off the plan purchases where construction has commenced.
For an off the plan purchase to be eligible for HBB the agreement for sale must be entered into:
1. on or after 1 July 2010 and before 1 July 2011 and completed by 31 December 2012, OR
2. on or after 1 July 2011 and before 1 July 2012 and completed by 31 December 2013.
For a new completed home to be eligible for HBB the contract must be entered into on or after 1 July 2010 and before 1 July 2012.
Important : Applications for exemptions or concessions under HBB must be made within 3 months of the date of the agreement for sale.
Seniors Principal Place of Residence Duty Exemptions (SPPR)
The SPPR provides full exemption for eligible seniors purchasing a new home that is to be occupied as their principal place of residence.
Applicants must be 65 or over and selling their current residence.
Should you require any further information please do not hesitate to contact us.
Click here to read Fact Sheet from Office of State Revenue
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Publication: www.money.ninemsn.com.au
Date: 8 July 2010
The NSW government has cut stamp duty to zero on new homes and apartments worth up to $600,000 as part of today's 2010/11 budget announcement.
This will save homebuyers up to $22,490, NSW Treasurer Eric Roozendaal says.The government will also cut stamp duty by 25 per cent on homes that are under construction of have just been built, saving homebuyers an estimated $5,623.
The NSW government forecast a budget surplus of $773 million for 2010/11, as the state makes it way back into the black this financial year and gets ready for a state election early next year.
The net operating surplus will come on top of a projected surplus of $101 million in 2009/10, according to budget papers tabled in state parliament on Tuesday.
That represents a strong turnaround from the forecast in the previous budget for a $990 million deficit in 2009/10.
Roozendaal forecast general government debt to be $12.23 billion, or 2.7 per cent of gross state product (GSP), by June 2011.
The estimated government debt as a share of GSP is expected to be the peak, before the ratio declines to 2.6 per cent in June 2012 and 2013 and falls to 2.5 per cent of GSP by mid-2014.
"NSW is already back in the black," Mr Roozendaal told parliament."At a time when many other economies around the world, particularly in Europe, are struggling, the financial position of our state is strong."The state will also cut the payroll tax from 5.65 per cent to 5.5 per cent on January 1 next year, and then to 5.45 per cent on January 1, 2012.
The budget papers show revenues have been revised up to $57.7 billion for 2010/11, an increase of $2.2 billion, or 3.9 per cent, over the revised estimate for 2009/10.
This includes a $1.4 billion increase in taxation revenue over the upcoming financial year to $20.2 billion, up 7.7 per cent over the revised estimate of 2009/10.
It also factors in a $1.4 billion increase to $14.8 billion of general purpose grants and an 8.8 per cent increase to $4.6 billion of sales of goods and services over 2009/10. This will be offset by a six per cent increase in employee expenses over 2010/11, reflecting increased services and frontline staff in the health sector, the budget papers show.
Meanwhile, the NSW government also forecast a budget surplus of $885 million in 2011/12, compared to the 2009/10 budget forecast for a surplus of $86 million.
It also forecast a surplus of $863 million in 2012/13 and a surplus of $628 million in 2013/14.
Budget papers show the government expect the state's unemployment rate to fall to 5.5 per cent in 2010/11, down from the 2009/10 estimate of 5.75 per cent. The state's jobless rate is expected to fall to 5.25 per cent in the 2011/12 financial year.
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Publisher: Sydney Morning Herald
Author: Alex Brooks
Date: 20th May 2010
Feel warm and fuzzy about your eco footprint and add value to your property.
I heard that going green is all the rage and can add value to my house - how much more money can I expect to get if it has all the right eco bells and whistles?
How long is a piece of recycled string? Answering questions about property value is complex. While prospective buyers could be willing to pay more for a property that uses energy wisely, just how much more depends on price range, location and features.
After all, that harbour view could add a few million dollars but installing one energy efficient light bulb may not add one cent. A report by the Australian Bureau of Statistics studied sale prices and eco star ratings in the Australian Capital Territory - it found that for a house worth $365,000, increasing the rating by half a star would add, on average, nearly $4500 to its price.
With electricity prices in NSW expected to increase by a whopping 64 per cent over the next three years, improving your property value is just one more motivation to take up eco renovating. Everything from shower roses to solar panels can alter a property's carbon footprint, so it's worth starting somewhere.
How can I make my kids turn the lights out and save me money?
Tell them Earth Hour is every day in your house - kids today are aware of the environment.
I want my home to be better for the environment - where do I start?
This whole green-living thing can baffle even the most zealous eco lover but it's best to start with your own home's energy and water audit. Gather your water and energy (gas and electricity) bills from the last 12 months and check out your consumption on the graphs on the bill.
You can usually work out roughly how many units of water, electricity or gas your home consumes. Most homes have seasonal spikes caused by winter heating or summer watering of the garden.
Going green is not about embracing one solution such as rainwater tanks or solar panels but more about reducing overall usage. For most of us, easy behaviour changes such as taking shorter showers are simpler than installing a grey water recycling system.
NSW's Independent Pricing and Regulatory Tribunal has confirmed the average electricity bill will skyrocket by between $577 and $918 a year by 2013 - so there is a hip pocket incentive to be more energy efficient. If you have a plan now, you might just pay for some of those eco renovations by reducing your electricity costs in the future.
If electricity costs are going up so much, what's the best way to keep warm in winter?
The old-fashioned way - dress warmly, wear ugg boots and hug someone you like. Heating is usually responsible for a third of your home's energy bills and that cost blows out if you heat a large open-plan family room.
The choice of heating has an effect on the environment, with radiant electric heating used in radiators, electric heaters, or fan heaters often being the most expensive and carbon-intensive. Natural gas has one-third of the carbon pollution and costs less.
The best option is direct heat, so a hot water bottle can be cheaper than a smoky open fire - which is usually inefficient, with more heat going up the chimney than inside. Slow combustion heaters are good but choose wood carefully if you're in an area where smoke pollution can be a problem.
Those old-fashioned door snakes are perfect to put under door or window gaps, keeping rooms toasty warm.
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Publication: www.brw.com.au
Author: Dan Hall
Date: 15 April 2010
Investors are finding value in apartments due to affordability and demographics. Agents in the northern NSW town of Balina say the ageing population are paying more for apartments that houses of a similar size and with bigger yards.
Warrnambool, Victoria, real estate agent Jeff Nesbitt says a preference for single dwelling properties is increasing the price of houses in Victoria's south-west. And older style of apartments in the suburbs on the fringe of Brisbane have provided stronger price growth (9%) than houses, over the 12 months to September 2009, PRDNationwide research shows.
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Publication: www.yourmortgage.com.au
Date: 07 May 2010
The Victorian government has announced it will extend the First Home Bonus (FHB) for an additional 12 months to cope with soaring demand for property.
Buyers looking to purchase new developments will benefit most from the recent state budget, announced by Treasurer John Lenders. Those buying newly constructed properties in regional areas gain an extra $4,000, bringing their total entitlement up to $26,000. An extra $2,000 is available for those buying new developments in metropolitan Melbourne, with up to $20,000 now available. First homebuyers purchasing existing properties are still eligible for the $7,000 FHOG under the federal scheme.
The news was a welcome change for first homebuyers who are feeling the pinch of yet another interest rate rise. The lift, combined with property prices soaring by 28% over the past 12 months, has threatened to push first homebuyers out of the market.
According to REIV CEO Enzo Raimondo, the extension of the FHB will help thousands of young people move into successful home ownership. "The fact that first homebuyers of a new home will now receive $20,000 in Melbourne and $26,500 in regional Victoria will help thousands of young people exit the tight rental market and buy their first home," he said.
However, Raimondo said he finds it disappointing that buyers of existing homes will see their level of assistance slashed. "It appears that the removal of the $2,000 FHB for existing homes pays for the $2,000 increase for new homes," said Raimondo. "This measure will make it harder for 70% of first homebuyers and easier for 30%," he said. As Victoria struggles with a shortfall of approximately 22,000 homes, it is anticipated that the FHB will help increase supply.
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Publication: Finance Matters Newsletter
Author: Anthony Simon
Date: May 2010
Many people "believe" that as interest rates increase, property prices flatten, or even fall. This "belief" is at times justified due to the sentiment that property should drop when interest rates increase, coupled with a very short term drop in auction clearance rates. But when we look at the fundamental reason why interest rates are increased by the Reserve Bank of Australia (RBA) and overlay this with business confidence and past property price performance, we come to a very different conclusion.
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Publication: Your Investment Property magazine.
Author: Ian Hosking Richards
Date: May 2010
Each month, Ian Hosking Richards shares a fundamental a tip or two to help budding investors build the best investment property portfolio they can.
This month I would like to talk about valuations. Whilst I do not expect valuers to agree with what I say, these are nevertheless some of the experiences I have had with valuations over a number of years. When you put in an application for finance to purchase property, the lending institution will order a valuation of the proposed security property (unless you have offered them plenty of additional security). Unfortunately, it is not at all uncommon for valuations to come back at less than the contract price, sometimes a lot less.
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Publication: www.apimagazine.com.au
Date: 28 April 2010
Future housing supply depends on improving the efficient delivery of homes to the market, according to a
branch of the Property Council of Australia.
The Residential Development Council says the assessment was made in the National Housing Supply Council's recently released second State of Supply Report.
"Speeding up the supply pipeline, particularly the first three stages of development, is crucial," says Caryn Kakas, executive director of the Residential Development Council.
"It can no longer be accepted that it takes up to 14 years to deliver supply to market."
"Establishing targets for development is not enough. If we are to harness the full capacity of the industry, we must improve the ineffective and inefficient systems that the development industry operates within."
Kakas says improving planning across the country is imperative, which means that once a strategic plan has been committed to it’s able to be implemented.
"Implementation is where we have fallen down as a country and our supply and infrastructure shortages demonstrate the years of neglect in managing delivery of housing supply," she says.
The fallout from the global financial crisis is still damaging the housing sector, according to Kakas, which means that it's more important now than ever to address the barriers to supply.
Australian Property Investor magazine recently conducted its own investigation into the dilemma of housing undersupply and discovered that a large part of the problem stems from excessive infrastructure and zoning charges being lumped on developers by local governments before a project has even begun.
"These charges have multiplied over the past eight years, making land development unprofitable and unaffordable nationwide," editor Eynas Brodie observes.
Brodie says the charges go beyond providing the infrastructure basics of water supply, sewerage and stormwater facilities, with some developers also required to donate more than 10 per cent of their land to create parks and pay for the construction of roads.
"Someone has to pay for the infrastructure, but one of the bones of contention here is whether it should be developers or the government," she says.
"Land supply, timeliness and affordability are three of the big sticking points in this dilemma that need to be worked through between government and developers before the housing supply problem can be ironed out," she adds.
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Author: Patrick Stafford
Date: 28 April 2010
The Australian housing shortage will hit 200,000 this year as developers struggle to meet demand, bogged down by a shortage of credit, higher interest rates and regulatory burdens, experts have warned.
The comments come in response to a report from the National Housing Supply Council, which says the supply-demand gap increased to 178,500 homes during the 12 months to June 2009, representing an increase of 99,500 during the previous 12 months.
Additionally, the report also stated the national shortfall will reach 202,400 this year in a "medium projection", and could possibly hit 640,600 dwellings by 2029 if nothing is done to fix the problem. Council chairman Owen Donald has said this number could be even higher.
Victoria has recorded a shortfall of about 22,000, with the biggest shortages in New South Wales and Queensland of 57,600 and 56,100 respectively. The lowest shortfall is in the Australian Capital Territory, with a shortfall of just 5,000 dwellings.
The figures come just weeks after a Housing Industry Association report found the demand-supply gap will hit 466,200 by 2020 if no action is taken to increase dwelling construction rates.
The report noted a number of barriers to development, such as high levels of regulation and difficulty accessing finance, along with a shortage of land.
''Community opposition is often a significant barrier to infill and medium-density development,'' it also stated.
David Airey, chief executive of the Real Estate Institute of Australia, says the shortage is just "same-old".
"Nothing changes. The states blame the Federal Government, the Government blames local authorities and it keeps going around in circles until somebody grabs someone and says that we need a cohesive plan. It's going to continue to get worse."
"In simplistic terms, people are choosing not to build new homes and developers are not putting up new spec homes in housing estates to assist the supply side. The established home market is under pressure with increased demand and a lack of a supply."
Airey says these factors, combined with interest rate rises, are deterrents to developers who "simply can't borrow money". He recommends the Federal Government institute a national building planning authority which could coordinate with state authorities to open up new land developments.
"At the very least we need states to take over planning regulations away from local authorities."
The report itself states developers are concerned about the increasing cost of land, and the burden of taxes and charges associated with development. It claims these prices put housing "beyond the reach of many" who would have been able to buy in previous years, thus restraining growth.
"The Council notes that ensuring an adequate supply of affordable serviced lots with ready access to jobs, transport and services has proven challenging in several cities. Measures to increase land supply and reduce the cost of urban infrastructure to home buyers would likely stimulate an increase in production and a reduction in the price of new housing."
It also claims the solution is a matter for governments at all levels, whether the solution be "changes in the nature and incidence of housing-related taxation, measures to address land supply, measures to reduce the cost and improve the delivery of urban infrastructure, further changes in planning and development approvals processes, subsidies for owner-occupancy and investment, and/or direct provision of housing".
CommSec economist Craig James also said Government action is appropriate given the dramatic projections included in the report.
"The bottom-line is that the Reserve Bank can't solve the housing crisis by lifting interest rates. This only would serve to temporarily depress demand and reduce incentives for investors and developers to increase supply," he said in a statement.
"Clearly it's now up to state and territory governments to practically respond to the findings in the latest report. The time for fine words and statements of intent has passed. Now budding home buyers, renters, the Reserve Bank and developers all want to know how the supply gap will be bridged."
But not all agree that the shortage problem should be fixed via the construction of new dwellings. Louis Christopher, SQM Research founder, believes there is more to be found in the vacancy statistics than most people believe.
''The vacant stock identified in the 2006 census was roughly equivalent to six times the number of new dwellings completed each year and eight times the number of homeless people in 2006,'' the report stated. Christopher says this point is crucial to understanding the shortage problem.
"I agree that vacancies are tight, and the issue there is particularly at the lower end of the market. But it's important to note the shortage isn't everywhere, for example, I don't believe the shortage is that high in south-east Queensland, and I struggle to see a shortage in Perth."
Nevertheless, Christopher says action must be taken to increase supply, but he also believes an increase in construction is already underway and there could be significant improvements made to the supply gap this year alone.
"I think we are going to see a resurgence in supply. We need a normal economy for that to happen, going forward, which we have, and I believe there is actually more of a chance of a greater supply response in the short- to medium-term."
But the New South Wales Property Council isn't so optimistic. Executive director Glenn Byres said in a statement in response to the report that the Government must take action quickly to address the problem or face a genuine crisis.
"The Government needs to act more urgently in taking responsibility for the supply shortfall in Sydney and facilitating projects from concept to completion."
"We need to move past a regime of high developer levies that diminish the feasibility of projects and reduce housing affordability. NSW also needs to deliver on past policy promises, including the introduction of a deferral mechanism to the point-of-sale for State Infrastructure Contributions."
"Delays and complexity in the assessment process can mean that housing projects currently entering the system won't hit the market for three years."
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