House prices are topic of the moment. Whether you’re taking out home loans to purchase a property, or in the market to sell, you will likely have an interest in where values could be headed over the coming months. If recent research from CoreLogic RP Data is anything to go by, property prices in Sydney look to be continuing their rapid rise.
CoreLogic’s Home Value Index indicates that Sydney’s property market is showing signs of improvement after a relatively slow year to December 2014. While price growth slowed back to 12.4 per cent last year, 2015 has started off with a bang. The price of a home in the Harbour City increased 3 per cent in March alone. This follows exceptionally strong growth over the three months to March 31, where house prices soared 5.8 per cent.
The New South Wales capital remains far and away the most expensive location in Australia to buy a home, as even Melbourne sits dramatically behind, with prices only growing 5.6 per cent last year. This highlights just how strong the Sydney market is performing and is something that buyers need to be aware of. Saving up for a 20 per cent deposit could become a bit more difficult, so make sure to discuss the financial options fully with our lending professionals at Police Bank.
Holding on strong
On top of the deposit, tax is another necessary evil when buying a home in New South Wales. In fact, you can be charged a fee when buying a house and even when taking out a mortgage. The Real Estate of New South Wales has pointed out that the state government expected to collect around $5,898 million from stamp duty between 2013-2014 alone.
However, there could be some relief in sight. The federal government has released its Tax Discussion Paper, which highlights that stamp duty is one of the country’s most inefficient taxes. Treasurer Joe Hockey said that Australia needs a tax framework that can adapt to its shifting needs – and property prices are just one aspect. As homes creep into a higher price bracket, the proportion of tax you pay on the purchase could also increase.
The Housing Industry Association (HIA) has welcomed the paper’s release. In a March 30 statement, HIA Managing Director Shane Goodwin said the discussion paper is a positive move towards reform.
“Stamp duty on property conveyances is Australia’s most inefficient tax, and housing taxation reform can unlock substantial productivity gains and boost economic growth in the Australian economy,” Mr Goodwin said.
Households will need to wait until 2016 to see some policy outcomes, but the signs look promising. A lower level of stamp duty could open the property market to a bigger pool of buyers – and even keep a substantial amount of money in your savings account.