PROPERTY MARKET UPDATE- AUGUST 2020
MARKET UPDATE AUGUST 2020
Whilst the Local property market values increased to June 2020, the recent spikes in Coronavirus in NSW is expected to put a downward pressure on prices in the second half of the year.
However we are not currently observing any likelihood of distressed sales emerging.
The NSW government has introduced emergency packages to first home owners only purchasing NEW (not existing) properties by reducing stamp duty costs.
Supporting first home buyers
Stamp duty would be eliminated on newly-built homes below $800,000 (the threshold was previously $650,000) and it the concessions decrease between $801,000 to $1 million.
The changes would save first home-buyers stamp duty of up to $31,335 on a new $800,000 home and save $15,668 on a $900,000 new home
The change will last for a 12-month period, commencing on August 1.
In surrmary, For first home buyers, this comprehensive package will:
- abolish stamp duty on all homes up to $800,000
- Provide a $10,000 grant for builders of new homes up to $750,000 and purchasers of new homes up to $600,000
- abolish insurance duty on lenders’ mortgage insurance
- ensure foreign investors pay higher duties and land taxes
- no longer allow investors to defer paying stamp duty on off-the-plan purchases.
The Prime Minister confirmed a big drop in immigration and that reduced immigration was going to be one of “the real impacts” of the pandemic because our borders aren’t opening up any time soon. The industries affected will be across the board, from tourism to housing.
Dr Wilson, at My Housing Market website, said he’s most concerned about any reduced demand from students along with the collapse in tourists. He said these two factors had contributed to the current spike in rental vacancies for landlords in Sydney which was still at peak new supply from the recent building boom.
While the recent impact of high immigration on Sydney’s housing market had been overstated — particularly in relation to home buyers — Dr Wilson said the weakening rental market was being affected by reduced immigrant numbers.
The AMP Capital chief economist Shane Oliver said the drop in immigration will cut underlying demand for housing by about 80,000 dwellings per annum nationally from a norm of about 200,000 dwellings in recent years.
Mr Oliver said for NSW the reduction will be about 26,000 dwellings, “and most of this will be felt in Sydney.”
Overall Property Prices
“This reduction in demand comes at a time when the rental vacancy rate in Sydney has already jumped from well above average levels and still faces a large increase in unit supply ahead,” he said. “As a result it will, along with high underlying unemployment levels, put downwards pressure on property prices.”