The Victorian State Government’s first home buyer stamp duty cuts are available from today but property expert and CEO of WBP Property Group, Greville Pabst, warns about the dangers of first time buyers chasing the hype.
“Whenever the Government announces a new property scheme a surge in hype and activity follows. With the new stamp duty scheme now available first home buyers should be wary of the dangers of plunging into the property market blind,” advises Pabst.
According to the State Revenue Office, the scheme will provide a series of cuts to stamp duty over the next four years. In the scheme’s initial phase buyers receive a 20 per cent cut to stamp duty, saving them up to $6214 on a principle place of residence valued at the schemes cap of $600,000. In addition, existing first home owner grants will remain unchanged, offering first home buyers $7,000 for established homes and between $20,000 and $26,500 for new homes.
Historical data collected by the State Revenue Office in the last decade demonstrates a strong correlation between changes in grant incentives and the number of first home buyer applications. According to Pabst, the current scheme is no exception. “Recent figures already show an increase of 18 per cent in the number of applications to 1467 in the month of May. This is indicative of astute first home buyers taking advantage of the incentive before the rush.”
While this is a positive sign for a slowing market Pabst advises first home buyers to let history serve as a warning. “The activity created as a result of previous first home buyer schemes has produced significant demand for property at the lower end of the market, applying upward pressure on property values that effectively undermines the schemes’ initial purpose.”
When deciding to enter the market Pabst recommends buyers carefully review their own unique financial position and consider what long-term benefit, if any, schemes such as these will provide to them. “Purchasing property based on periphery advantages such as grant incentives, rental guarantees, tax benefits and more can create unrealistic expectations and result in disappointing outcomes,” says Pabst.
“Instead, when choosing to buy base your decision on the inherent qualities of the property, such as location, property type and land size.” According to Pabst, “History shows that choosing the right property is more important than when you buy.”
Whether purchasing as a first-time homeowner or a seasoned investor buyers should always make well researched decisions based on independent analysis and advice.
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