Stamp-duty exemptions for first-home buyers in NSW have been tightened in a bid to spur building activity.
From January 1, 2012, first-timers in the property market will no longer be able to avoid having to pay transfer title charges on existing homes under $600,000.
Property developers welcomed the NSW coalition government's 2011-12 budget measure, which will see stamp-duty exemptions restricted to newly built and "off the plan" homes, in an effort to stimulate building activity.
Advertisement: Story continues below But the Labor opposition says it will leave young families tens of thousands of dollars worse off, while the Real Estate Institute of NSW warns it will make home ownership less achievable.
It was Bob Carr's state Labor government which, in 2000, introduced the First Home Plus scheme of stamp-duty exemptions.
A decade later, Treasurer Mike Baird has axed the scheme's exemption for first-home buyers who snap up existing properties.
"With new housing at historically weak levels, and a weak fiscal position, we need to target our assistance to home-buyers to where it is most needed in the economy," Mr Baird told parliament after handing down his first budget on Tuesday.
"We recognise this is a difficult decision, but we believe it is necessary to make buying a new home relatively more attractive than buying an existing dwelling for first-home buyers."
However, Urban Taskforce, the peak body for property developers, said the move would improve housing affordability.
"This reform will make housing more affordable for first-home buyers by boosting the new housing supply," chief executive Aaron Gadiel told reporters.
Opposition Leader John Robertson said the axing of stamp-duty concessions for existing homes would hurt young families.
"It's going to see a significant number of new home-buyers, and in particular young families buying their first home, thousands of dollars worse off," Mr Robertson told reporters.
The Real Estate Institute of NSW said the tightening of stamp-duty exemptions would end the great Australian dream for many in the state.
"This is really disappointing news for families, essential workers and all those trying to buy their first home," institute president Wayne Stewart said.
"Unfortunately for some, the dream of home ownership will now become simply unachievable."
Mr Stewart said while the coalition had promised 10,000 new housing lots in western Sydney over four years, most would be beyond the price reach of many first-time home-buyers.
He predicted an increase in house prices in late 2011.
"It is inevitable that as first-home buyers scramble to beat the January 1st deadline, we will see prices increase as demand exceeds supply," Mr Stewart said.
But the Property Council of Australia said the axing of stamp-duty concessions for existing homes would be unlikely to have a long-lasting effect on housing prices.
"Any market reaction in the short term won't radically alter the market - it will be at the margins," NSW executive director Glenn Byres told AAP.
The revised First Home Plus and First Home Plus One schemes will provide full transfer duty exemptions for newly built home costing up to $500,000, and partial duty exemptions for homes worth between $500,000 and $600,000.
The $7000 first-home-buyer grant will continue to be available to all eligible first-timers.
The Home Builders' Bonus for over-55s who buy a newly built home costing up to $600,000 has also been extended so they are exempt from paying stamp duty until July 1, 2012.