Property prices in affordable areas are expected to jump “overnight” on the back of changes to first-home buyer stamp duty concessions starting in July, experts say.
Strategic vendors in these locations are holding off accepting offers until next month to take advantage of the expected surge in demand.
First-home buyers in NSW are set to save up to $24,740 with stamp duty concessions for homes up to $800,000 and a full exemption for homes under $650,000.
Among those anticipating they will benefit from the changes is Quakers Hill home owner Bhugol Kansakar who bought his house for $611,000 in March 2015 – then a first-home buyer himself.
Since May his three-bedroom home at 9 Nyngan Street has been on the market for $730,000 to $760,000.
We’re holding out until next month as stamp duty will be off for the first-home buyers.Home seller, Bhugol Kansakar
“We’ve had offers around $720,000 to $730,000 … we’re holding out until next month as stamp duty will be off for the first-home buyers,” Mr Kansakar said. In this price bracket, first-home buyers would get a partial exemption from July.
“It is a big block of land, three-bedrooms, perfect for a first home.”
He anticipates he will be likely to get $760,000 or more for the home when the new rules come in.
And he’s far from the only one anticipating he’ll get a premium, his sales agent Raine & Horne Blacktown business development manager Edwin Almeida said.
About 40 per cent of inquiries on homes he had listed across the Blacktown Council area priced under $750,000 were first-home buyers asking if they could formally exchange next month.
He expects local prices would jump by $20,000 to $40,000.
“Easy money does not make the market more accessible for first-home buyers. It just means vendors and developers will increase the price of property to meet demand,” Mr Almeida said.
He has more properties to come onto the market – with the vendors biding their time until July – in areas like Glenmore Park and Woodcroft.
He anticipates the rush will be mainly in late-July and August, but prices could “rise 5 per cent overnight”.
“No stamp duty is a big deal for first-home buyers, it gets them into the market a year quicker,” Mr Almeida said.
Until July, first-home buyers are only eligible for stamp duty exemptions for new homes priced up to $550,000, with concessions up to $650,000.
A similar surge of buyers has been seen in the past when first-home buyer initiatives were introduced.
The October 2008 introduction of an additional $7000 boost – bringing total grants to $14,000 until September 2009 – resulted in a record year for NSW first-home buyer activity.
Already, First Home Buyers Association co-founder Taj Singh said they had been “inundated” with inquiries from first-home buyers looking to sort out loan pre-approvals before July.
He said interest was particularly intense in Western Sydney and the Central Coast.
“There may be a lot of competition for entry-level apartments … the stamp duty changes have essentially allowed first-home buyers who were $20,000 to $25,000 short of their deposit saving goal to enter the property market now,” Mr Singh said.
“We anticipate first-home buyer activity to grow, but [are] also concerned it may push up prices due to the competition as a result of the changes not being effective immediately but at a future date.”
He had also heard of agents putting sub-$650,000 properties up for auction in the first week of July due to an expected surge of competition.
Real Estate Institute of NSW chief executive Tim McKibbin said he welcomed the stamp duty changes.
“Most first-home buyers buy existing property … it is going to be beneficial for a lot of people,” Mr McKibbin said.
But he didn’t think there would be a dramatic surge come July, given the grant – unlike that introduced in 2008 – did not have a set “end date” that would pressure first-home buyers into the market.
He also said the thresholds were too low for Sydney buyers, where the median house and apartment price is $1.15 million and $718,000, respectively.
Domain Group data shows the regions in Sydney and surrounds with median asking prices under $800,000 are the Blue Mountains, Central Coast, south-west and west.