Nope, it’s not about the legend of the Trojan horse. In this case – and it is my blog after all – we’re talking about government incentives.
For the most part, the theory behind home-buyer incentives (and these include concessions for stamp duty or transfer duty as it is now known) is commendable.
But in practice, as we have seen, most government handouts can be misguided and misdirected – sometimes amounting to little more than political nonsense.
Ultimately, as we wrote here, grants like the FHOG, for example, have the propensity to be detrimental to first-home owners; being inflationary in nature, and resulting in upward movement of prices.
In short, I don’t like politically inspired property incentives.
But that’s not to say that they are all bad, all the time, and I will concede just a tad that some grants and concessions may provide positive impact.
On the eve of a new financial year, here are some of the changes that we can anticipate in home-buyer incentives and transfer duty:
Queenslandwill say hello to new transfer duty rates from 1st July. This is a reinstatement of the Principal Place of Residence Exemption and applies to the first $350,000 value in a home.
In terms of transfer duty relief, numbers here are enticing – a $300,000 property purchase, for example, that previously incurred $8,325 in duties will now require just $3,000. And a $500,000 purchase that previously incurred a transfer duty of $15,525 for example, will now require $8,750.
New South Wales will see a new home grant scheme – purchasing or building a new home will provide $5,000 to buyers for homes valued up to $650,000 and land valued at up to $450,000.
The state will shelve its previous bonus scheme which provided a full exemption on transfer duty for new homes up to $600,000 and land up to $400,000.
Victoria– From 1st July, two first home buyer schemes will be dropped – the $13,500 first-home bonus scheme and the $6,500 regional bonus scheme.
First home buyers will see an increase in transfer duty reductions from 20% to 30% on the 1st January; from 30% to 40% the following January, topping out at a 50% reduction effective September 2014.
South Australia – transfer duty will be scrapped for off-the-plan apartments – here’s what we think about paying duty on off-the-plan purchases – in Adelaide City and North Adelaide.
Elsewhere, a full concession will be capped for off-the-plan apartments valued up to $500,000 up to 30th June 2014.
1st July will see the first-home bonus grant halved with up to $4,000 available for eligible buyers who qualify for the federal $7,000 first home owner grant; and abolished entirely from July 2013.
Schemes come and go; some hold promise and may deliver; too many fizzle and are quietly put to bed.
While the introduction of a new grant, or the ending of a current one, often brings forth a flurry of activity, more often than not, the activity is not sustained. As we wrote here, there’s a lot that we can do, and a lot that we need to undo to boost our ailing property industry. But building grants and the like are not always the answer.