The NSW government has increased the first home owners grant for those buying new dwellings by $3,000, in the mini-budget released on 11 November 2008, in a surprise move aimed at stimulating the ailing housing market. The economic sweetener takes the grant to $24,000, including recent increases from the federal government.
A family buying a newly-constructed home worth, for example, $500,000, will be $41,990 better off, under the following schemes:
- for NSW first home owners grant;
- $3,000 for NSW grant in mini-budget;
- $17,990 for NSW stamp duty exemption for all first homes up to $500,000; and
- $14,000 for Commonwealth first home owners boost.
Premier Nathan Rees made the following comments in relation to the scheme:
- The boost combines with the fall in interest rates to make buying a home more affordable, as well as giving a shot in the arm to the construction industry;
- The property market in NSW has been hit hard by the global economic downturn and the scheme will help stimulate a critical sector of the economy;
- The grant will help around 3,000 first home owners, and will operate for one year, after which it will be reassessed in the context of the property market; and
- The grant is a further $9 million investment in the NSW housing sector and will be fully-funded by the NSW government.
The increased grant comes as statistics reveal that recent interest rate cuts have failed to resuscitate the spring selling season, normally the busiest time for both home buyers and sellers, but which has fallen by 11% in the past year (just 12,970 houses have been sold across Sydney in October-November, compared with the 14,598 sold last year, and as compared to the 20,000 sold in 2003).
However for the first time in NSW the grant will be means-tested. The state’s portion of $7,000 to $10,000 (for first-time buyers of existing and new homes respectively) will not be available for properties costing more than $750,000 (as from 1 July 2009, subject to Commonwealth agreement). As a result, the government will effectively recoup $14 million a year by dropping grant assistance in this manner.
In response to the scheme the Council of Social Service of NSW (NCOSS), in their report entitled "Response to the 2008-09 NSW Mini Budget", made the following comments:
- The removal of the grant for dwellings worth $750,000 is a positive measure, however the savings should be reinvested into the supply of community and public housing or the Affordable Housing Innovations Fund; and
- The increase of the first home owners grant for new dwellings by $3,000 is,"a questionable use of scarce state funds".