Budget measures aimed at curbing explosive house prices are unlikely to have an impact in NSW regional areas experts say, instead calling them a ‘drop in the ocean’ and a missed opportunity to address housing affordability.
There was hope the budget would provide relief to regions like Wollongong, in the Illawarra, where booming property prices are outpacing Sydney according to market analysts.
NAB’s most recent Housing Market Report showed house prices in the region rose 12.9 per cent last year, almost double the regional NSW average.
The coastal city was dubbed the third most expensive city to buy a home in Australia after Sydney and Melbourne in a 2016 Domain Group property study.
Renters have welcomed the Government’s attempt to help them buy a new home using voluntary contributions from their superannuation to save for a deposit.
But experts say the changes do not go far enough.
University of Wollongong Professor of Economics Alex Frino said giving tax breaks to first home buyers through the super system would not solve the issue of supply.
“That will just simply aggravate the problem, so there’s more money chasing existing properties,” Professor Frino said.
He doubts luring older people into downsizing by allowing them to bank an extra $300,000 from the sale of their home into super will work either.
“The biggest problem with empty nesters exiting housing into something smaller is stamp duty,” he said.
“So some modest measures, one of them will simply increase and aggravate the problem, the other may work at the fringes so not a great outcome in terms of housing affordability,” he said.
Real Estate Institute Illawarra Chapter chairman Trevor Molenaar believed the Government should have done more.
“I think it was a drop in the ocean of what we feel could have been done,” Mr Molenaar said.
“We were calling for 50 per cent exemptions on stamp duty for first home buyers, I feel that would have gone a long way to starting the process for making it affordable for the Illawarra residents,” he said.
“I’ve spoken to a lot of buyers already and they are seeing no real change in their side of things so the affordability factor, or the lack of affordability, is still there.”
But Mr Molenaar said leaving negative gearing relatively untouched was a good move given the Illawarra market is generally made up of ‘Mum and Dad investors, not multi-millionaires’.
The new First Home Super Savers Scheme will allow prospective home owners to access a concessional 15 per cent tax rate for up to $30,000 from their super.
But resident Graeme Frazer said this budget measure was too little too late.
He said the maximum amount a first-time buyer could funnel from their super would not be enough for them to gather a deposit for a home in the Wollongong region.
“[They are] trying to create an illusion really, it’s like shutting the gate after the horse has bolted, waste of time, and why is the limit so low?”, Mr Frazer said.
“How much is a house deposit these days?”
But northern suburbs tradesman and renter Damien Blanch believed it would now take he and his partner less time to get a foot in the expensive market.
“The new budget, it has given us a bit more hope about saving a deposit,” Mr Blanch said.
“It is tight to get in.
“It might me take a couple of years but hopefully fewer years now,” he said.