B Invested

NEW NSW PREMIER TO TACKLE HOUSING AFFORDABILITY?

 

The new NSW Premier, Gladys Berejiklian, identified housing affordability as one of the state’s most important issues. First home buyers and property experts alike are waiting to see what moves the government will make to tackle this.

In a speech delivered shortly after being elected leader of the Liberal party, Berejiklian signaled that increasing housing supply would be the Government’s main focus. However, she said she was open-minded to the suggestions of experts from beyond Parliament’s walls.

 

HELPING OUT FIRST HOME BUYERS

Binvested co-founder Nathan Birch sees this as a step in the right direction as Sydney remains severely undersupplied in housing. While increasing supply would help address the problem, he says, “More needs to be done to increase affordability for first home-buyers.”

Helping first home-buyers get into the market is something Binvested has been doing for quite some time. By using our group buying power, we are able to offer land at wholesale prices in order to provide affordable housing.

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We also pride ourselves on helping first-timers build property portfolios in order to achieve their goal of home-ownership.

While these options are available for those who are motivated enough to jump in and get cracking, the Government can do things to make housing more affordable for the average income earner.

1. CHANGE THE FIRST HOME-OWNERS’ GRANT

The first, is to rethink the way the first home-owners’ grant is distributed. Currently, the NSW Government offers $10,000 to first home owners purchasing or constructing a new home.

In order to address affordability, the Government should make this available for first home owners purchasing existing housing, says Nathan. This would ensure that those who can only afford to buy older, cheaper housing also get a helping hand.

 

2. CHANGE THE WAY TRANSFER DUTY IS CHARGED

Transfer Duty (also known as Stamp Duty) has been raking in quite a lot of revenue for the State Government throughout the course of the property boom.

Although there are some concessions and exceptions in place for first home-buyers, the majority of buyers do not benefit from them.

“Currently, a first home-owner is exempt from paying transfer duty on the purchase of a new home up to the value of $550,000. Or, they are eligible for a concession if the new home is valued between $550,000 and $650,000,” says Nathan.

“How many new homes in Sydney are worth less than $550,000 – or even $650,000?”

According to Nathan, the Government could recirculate the wealth they have accumulated during the property boom and put it back in the pockets of first home-buyers. Changing the way Transfer duty is charged, or, changing concessions to reflect current median house prices, would help increase affordability.

 

3. RELEASE MORE LAND

Nathan says, there are several green belts in Sydney’s west that could be opened up for development. The corridors near Penrith, Campbelltown and Hawkesbury could be rezoned and sold off for development. If this was planned and executed correctly, Sydney’s undersupply problem could potentially be turned on its head.

With the construction of the NorthConnex promising a shorter commute time from the Central Coast to Sydney, the Central Coast also offers a lot of potential for more development, says Nathan.

4. REZONE AFFORDABLE AREAS THAT HAVE GOOD INFRASTRUCTURE IN PLACE

According to Nathan, there are some areas in Sydney where housing is cheaper and more affordable, such as Mount Druitt in the west, that could be rezoned to create more medium and high density accommodation. Since Mount Druitt already has good infrastructure in place, it could support a higher population that its current, low density one.

 

5. GOVERNMENT DEVELOPMENTS

A really hands on way the Government could help address affordability, says Nathan, is to construct government owned development on mass. They could rezone areas, buy properties and redevelop using low cost construction.

The Government could then sell these properties at a fixed rate in order to provide affordable housing.

 

6. RETHINK LENDING CRITERIA FOR FIRST HOME-OWNERS

Raising a 20% deposit on an $800,000 property is not an easy task for most average income earners. Many first home-buyers would find it easier to get into the market if lending criteria allowed for a smaller deposit size.
It will certainly be interesting to see what the government does. As always, for any action there will always be a reaction. However, whatever happens, there is little chance of investors being negative affected. In fact, many historical affordability measures only resulted in higher prices.

Do you live or invest in Sydney? What are your thoughts on this issue? Should first home buyers be given a hand? What would you like to see?

 

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