First-home buyer suburbs where land tax will make it even easier to buy in

First-home buyers in New South Wales will be given a leg-up into the property market with a new tax designed to cut back the initial costs.

The most affordable entry-level suburbs, identified by Domain, with the shortest deposit saving periods, will nudge even closer within reach of hopeful buyers, attracting tens of thousands of dollars less in upfront payments under the plan.

The NSW government has launched an online calculator to show how much prospective buyers will save by electing to pay an ongoing land tax instead of stamp duty.

The Perrottet government will put legislation to parliament this week to enable the First Home Buyer Choice program to start trailing from January next year.

First-home buyers have been invited on the Services NSW website to register their interest to receive updates about the scheme.

Instead of stamp – or transfer – duty, buyers will instead fork out a $400 annual fee plus 0.3 per cent of the land value, which is determined using data from the Valuer-General.

NSW premier Dominic Perrottet has called the land tax a “game changer” for buyers battling to buy their first property, after 70 months or more of scrimping for a 20 per cent deposit.

If land was valued at $1 million, buyers would pay $3,400 per year under the opt-in tax proposal.

This would save a first-home buyer, purchasing beneath the $1.5 million threshold for eligible properties, up to tens of thousands of dollars in stamp duty.

Banks often roll the transfer duty in the home loan amount. However, banks are reducing borrowing capacity, as interest rates rise, which is putting downward pressure on how much borrowers can access.

The following five suburbs were pinpointed in the Domain First-Home Buyer Report 2022 as requiring the shortest amount of time to save for a 20 per cent deposit (for couples, on two incomes).

The land tax scheme is applicable to transactions more than $650,000, as stamp duty only applies to properties above that price in NSW.

Using the new calculator, this is what the land tax versus the stamp duty would be for first-home buyers, on houses and units currently for sale in those postcodes.

2/156 Canberra Street, St Marys
Price guide: $679,950
Time to save a 20 per cent deposit: 70 months
Land value: $206,750
Land tax: $1,021 annually
OR
Transfer duty: $6,210

14 Alson Street, Mount Druitt
Price guide: $1,050,000
Time to save a 20 per cent deposit: 71 months
Land value: $425,000
Land tax: $1,675 annually
OR
Transfer duty: $42,340 upfront

47-49 Macquarie Avenue, Campbelltown
Price guide: $1.4 million
Time to save a 20 per cent deposit: 74 months
Land value: $762,000
Land tax: $2,686 annually
OR
Transfer duty: $61,200 upfront

1 Pollock Avenue, Wyong
Price guide: $685,000
Time to save a 20 per cent deposit: 74 months
Land value: $368,000
Land tax: $1,504 annually
OR
Transfer duty: $7,254 upfront

3/155 Francis Street, Richmond
Price guide: $785,000
Time to save a 20 per cent deposit: 79 months
Land value: $194,000
Land tax: $982 annually
OR
Transfer duty: $27,981 upfront