Two big winners from the 2017-18 NSW Budget
Thu June 29, 2017
Early June saw the release of the NSW Budget for 2017-18, and while much of it was roughly as we expected, there were still a few surprising inclusions that could have significant impacts on the Sydney property market. Overall, the budget promises positive change throughout the state, with a whopping $12 billion worth of surpluses making it possible to invest in the future - both with infrastructure spending and pathways for first home buyers to get into the market.
Let's take a closer look at what the new budget means for real estate by breaking things down into two winners, and one loser.
Arguably the biggest winner in the new budget is the state itself.
Winner: New South Wales
Arguably the biggest winner in the new budget is the state itself, which is set to see an almost unprecedented investment in infrastructure over the next four years - to the tune of $73 billion! Treasurer Dominic Perrottet described the budget, his first, as the "envy of the Western world," providing a huge payoff after a period of relative austerity.
"What [the budget] demonstrates is that if you embark on tough reform, which the people of NSW backed us in, we can ensure that communities across NSW reap those great dividends," he said to the Sydney Morning Herald on June 21.
So where will all of this investment go? The real question is where won't it go! Hospitals in the state can expect $2.8 billion of additional funding over the next four years, while schools will get $2.2 billion over the next five. Transport is also set for a share of the spoils, with more than $600 million being set aside to upgrade roads supporting Western Sydney Airport. All of these measures will make a big difference to the quality of life throughout the state, ensuring that cities like Sydney remain some of the most liveable (and desirable) in the world.
First home buyers will receive a $1.1 billion tax cut thanks to the new budget.
Winner: First home buyers
Speaking of first home buyers, they are perhaps the biggest winners when it comes to property, receiving a $1.1 billion tax cut over the next four years. This will be achieved through exemption from stamp duty for new and existing properties costing less than $650,000. Even for real estate above this line, buyers will still get a discount on stamp duty if their home costs less than $800,000.
In addition, first home buyers will be eligible for a $10,000 grant for new homes up to $600,000 or new homes on vacant land up to $750,000. We've suspected these sorts of changes could be coming since back in March, after seeing them introduced in other states, but it's still fantastic for it to be finally made official.
Unfortunately, no budget can keep everyone happy, and foreign investors have been hit pretty hard with a big increase of the taxes that they'll have to pay when purchasing real estate in NSW. Stamp duty for overseas buyers will double to a whopping 8 per cent, while land tax nearly triples from 0.75 to 2 per cent. The Australian Financial Review estimates that this will cost foreign buyers somewhere in the region of $893 million over the next four years, and while not everyone will be completely happy, these sorts of changes are needed to balance out the introduction of policies that support local buyers.
Overall the budget promises a lot of positive investment, and should have a great impact on Sydney and the rest of the state. To find out more about real estate in Sydney, get in touch with Laing+Simmons today.