A First Home Buyer looking to buy a new first home or build it, will now have greater capacity to enter the residential property market in South Australia with newly announced stamp duty reform and changes to the First Home Owner Grant. This ends a gloomy outlook for many First Home Buyers facing a higher priced property market, rising costs to build, and increased interest rates.
No Stamp Duty for First Home Buyers in South Australia
Coming into effect on the 15th of June 2023, the SA Government will abolish stamp duty for First Home Buyers purchasing a new home valued up to $650,000 or vacant land valued up to $400,000. This is a major boost for those looking to enter the property market for the first time, enabling buyers to get more bang for their buck.
Based on the 22/23 FY stamp duty charges, this could result in reduced costs of up to $29,580 for new home buyers or $16,330 for vacant land buyers looking to build.
This will allow First Home Buyers to enter the market sooner by using more savings toward the purchase price of a property, rather than the additional State Fees & Charges.
Increased Property Value Cap for the South Australian First Home Owner Grant
Eligible First Home Buyers looking to buy or build a new home in South Australia can access up to $15,000 with the First Home Owner Grant. The newly announced State Budget has increased the property cap for the First Home Owner Grant to $650,000. Previously the grant was restricted to properties valued up to $575,000 which didn’t quite reflect Adelaide’s median house price of $675,000.
More First Home Buyers can now realistically access the grant to assist with buying or building an owner-occupied home. The increased price cap is more relevant to the current market, which has seen house prices and build costs increase substantially over the past 24 months.
How can this actually help a First Home Buyer using Bernie Lewis Home Loans?
If you’re interested in buying or building your first home in South Australia, then you will now need to save less for your deposit to assist with the purchase.
Bernie Lewis Home Loans currently partner with a lender who will add a further $5,000 gift to First Home Buyers buying their first home. This in addition to the $15,000 First Home Owner Grant and no stamp duty payable can save a first-time buyer up to approximately $50K off of what they would previously pay for $650,000 new build. This could reduce the deposit payable on a property at the maximum price cap to $34,000, and at a fairly competitive interest rate with a good lender.
Prior to June 15 2023
Newly built home price cap = $575,000
Stamp duty payable = $25,455
First Home Owners Grant = $15,000
First Home Buyer Gift = $5,000
Minimum deposit required = $49,000
Post June 15 2023
Newly built home price cap = $650,000
Stamp duty payable = $0
First Home Owners Grant = $15,000
First Home Buyer Gift = $5,000
Minimum deposit required = $34,000
We don’t want to flood your mind with all the numbers at once, but First Home Buyers looking to buy land and build may be able to shave their minimum deposit down to approximately $32,500.
Low Deposit Option with HomeStart
We can also assist first home buyers with low savings purchase property in South Australia, through SA Government lender HomeStart. Eligible first home buyers can buy with as little as a 2% deposit, or build with a 5% deposit.
When comparing this to the newly built home scenario for $650,000, this could further reduce the minimum deposit required to $22,793. HomeStart do not charge Lender’s Mortgage Insurance which further reduces how much savings you may require to purchase. However, HomeStart are a little different to a normal lender and you may end up paying more interest back, so it’s best to check in with us to understand this option properly.
HomeStart have a number of ways they can assist home buyers with low deposits, not just first home buyers looking at new property.
There are many factors to consider when buying or building your first home and this article can’t cover all of the finer details, as there are a lot of eligibility conditions attached. There is also capacity to utilise the First Home Guarantee, which can assist with eliminating Lender’s Mortgage Insurance with some lenders. There’s a lot of information to cover, so the easiest thing to do is to simply speak about your circumstances and property goals with one of our Mortgage Brokers. Our team can establish what assistance may be available to you and how we can get it done for you.
*The information provided in this article is general in nature and does not take into account your personal circumstances. Since everyone’s personal situation is different, this article should not be taken as advice.
