Key Points from the 2024-25 New South Wales Budget
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Last Updated: 22nd July, 2024
Introducing the 2024-25 NSW Budget, a blend of opportunities and obstacles that could impact individuals ranging from homeowners to public-sector employees. Let’s delve into the specifics and identify who is benefiting and who is feeling the pressure.
Homeowners And Tenants: This budget serves as a welcome relief for those grappling with the high cost of housing. The government is investing $5.1 billion in social housing construction, including 8400 residences, 6200 of which will be new, and 2200 will be replacements (prioritising survivors of domestic and family violence). This scheme also commits $1 billion to renovate 33,500 existing social houses. In total, the government pledges to provide up to 30,000 homes, including 21,000 new and affordable homes on government-owned land.
Medical Sector: The healthcare industry is receiving a boost with $274.7 million designated for new hospitals and $480.7 million to reduce waiting times in emergency departments and bolster urgent-care services.
Public-Sector Employees: Public-sector employees are expected to benefit from a 10.5% wage hike over the next three years. This includes a $1000 cost-of-living adjustment to cushion against unexpected inflation spikes. This initiative is designed to attract and retain critical workers, ensuring that the state’s public services remain strong and efficient.
Survivors Of Domestic And Family Violence: The budget allocates $245.6 million over four years to assist survivors of domestic and family violence. This includes funding for new shelters, violence prevention programs, and enhanced legal support.
Communities In Need: In response to recent natural disasters, $5.7 billion is allocated for disaster recovery and response. This includes funds for road repairs, flood resilience programs, and rebuilding community infrastructure.
Low-income Families: Low-income households will benefit from ongoing cost-of-living support, including energy bill relief, preschool fee subsidies, and a cap on weekly tolls. These initiatives aim to alleviate everyday financial pressures, making budgeting easier for families.
Homeless Individuals: A total of $527.6 million is allocated for emergency housing and homelessness support services. This includes $260 million for crisis accommodation and $250 million to assist individuals at risk of homelessness, such as those transitioning from correctional facilities and mental health services.
Higher Income Earners: Tax bracket creep continues to affect, particularly impacting higher income earners. As inflation pushes incomes into higher tax brackets, these households face reduced income.
First-time Home Buyers: For those hoping to buy their first home, the prospect remains daunting. The cost of a mortgage on a new home has soared, particularly in areas like Western Sydney, where it has risen by 55%. This makes it more challenging for first-time buyers to afford a home, despite the increased availability of housing.
Residents of Western Sydney: Western Sydney is feeling the impact of rising living costs. Rents have increased by 25.8% since April 2022, and mortgage costs are higher than in other regions. This is creating a financial strain for many families, making the search for affordable housing even more difficult.
Government Sector: The state government is under financial stress. The budget projects a $3.6 billion deficit for 2024-25, requiring a halt on contributions to the NSW Generations Fund and a redirection of funds towards essential services and infrastructure. This underscores ongoing financial challenges and the tough decisions being made to balance the budget.
Foreign Home Buyers: The state’s foreign purchaser duty surcharge will increase from 8% to 9% from 2025, and the foreign owner land tax surcharge will increase from 4% to 5%.
The NSW Government has announced changes to foreign investor surcharges to increase housing availability for residents. Effective 1st January 2025, the foreign purchaser duty surcharge will be increased from 8% to 9%, and the foreign owner land tax surcharge will be raised from 4% to 5%.
These changes aim to make more properties available to NSW residents and ensure foreign investors contribute fairly to infrastructure and housing costs. With approximately 20,000 foreign-owned residential properties in NSW, these adjustments are significant.
Introduced in 2017, the foreign owner land tax surcharge rose from 2% in 2018 to 4% last year. The foreign purchaser duty surcharge, introduced in 2016 at 4%, doubled to 8% by 2017. These incremental increases balance the benefits of foreign investment with local community support.
The NSW Government will also adjust land tax thresholds from the 2024 land tax year onwards, maintaining their value over time and aligning with other Australian states. These changes are projected to generate an additional $1.68 billion over four years, helping to address the housing crisis.
In response to the recently announced NSW Budget 2024-25, Senior Mortgage Broker Jonathan Preston and CEO Alan Hemmings from homeloanexperts.com.au share their views on the budget’s implications for investors, non-residents and first-home buyers.
Preston: “The budget continues to place pressure on property owners through increased taxes. The decision to freeze land tax thresholds means that owners of investment properties, holiday homes, and commercial real estate will face additional costs. Specifically, the tax-free threshold remains at $1.075 million, leading to a $1.5 billion increase in land taxes and affecting approximately 35,000 more homeowners.
Moreover, the foreign purchaser duty surcharge will rise from 8% to 9% in 2025, and the foreign owner land tax surcharge will increase from 4% to 5%. This shift disproportionately affects non-residents, who have limited means to contest these changes. The budget fails to address the wider regulatory and cost-related challenges confronting the building industry, which I believe are bigger issues than approvals.”
Hemmings: “I agree with Jonathan. I see nothing beyond the changes to zoning around transport hubs, previously announced, that will address the core issue of housing supply. In fact, the additional taxes on investors (multiple properties and foreign owners) may exacerbate the situation for renters. Also, I haven’t found any changes to First Home Buyer schemes, so there is no assistance for them.”
The 2024-25 NSW Budget presents a complicated scenario. Despite investments in housing, healthcare, and support for vulnerable communities, broader economic challenges persist. High mortgage costs, escalating living expenses, and pressures on the government suggest that while progress is being made, the path to economic stability and affordability in NSW is still long and winding.
Contact us at 1300 889 743 or complete our free online assessment form to see how we can assist you.
Key Points from the 2024-25 New South Wales Budget
Key Points from the 2024-25 New South Wales Budget
Last Updated: 22nd July, 2024
Introducing the 2024-25 NSW Budget, a blend of opportunities and obstacles that could impact individuals ranging from homeowners to public-sector employees. Let’s delve into the specifics and identify who is benefiting and who is feeling the pressure.
The NSW Government has announced changes to foreign investor surcharges to increase housing availability for residents. Effective 1st January 2025, the foreign purchaser duty surcharge will be increased from 8% to 9%, and the foreign owner land tax surcharge will be raised from 4% to 5%.
These changes aim to make more properties available to NSW residents and ensure foreign investors contribute fairly to infrastructure and housing costs. With approximately 20,000 foreign-owned residential properties in NSW, these adjustments are significant.
Introduced in 2017, the foreign owner land tax surcharge rose from 2% in 2018 to 4% last year. The foreign purchaser duty surcharge, introduced in 2016 at 4%, doubled to 8% by 2017. These incremental increases balance the benefits of foreign investment with local community support.
The NSW Government will also adjust land tax thresholds from the 2024 land tax year onwards, maintaining their value over time and aligning with other Australian states. These changes are projected to generate an additional $1.68 billion over four years, helping to address the housing crisis.
In response to the recently announced NSW Budget 2024-25, Senior Mortgage Broker Jonathan Preston and CEO Alan Hemmings from homeloanexperts.com.au share their views on the budget’s implications for investors, non-residents and first-home buyers.
Preston: “The budget continues to place pressure on property owners through increased taxes. The decision to freeze land tax thresholds means that owners of investment properties, holiday homes, and commercial real estate will face additional costs. Specifically, the tax-free threshold remains at $1.075 million, leading to a $1.5 billion increase in land taxes and affecting approximately 35,000 more homeowners.
Moreover, the foreign purchaser duty surcharge will rise from 8% to 9% in 2025, and the foreign owner land tax surcharge will increase from 4% to 5%. This shift disproportionately affects non-residents, who have limited means to contest these changes. The budget fails to address the wider regulatory and cost-related challenges confronting the building industry, which I believe are bigger issues than approvals.”
Hemmings: “I agree with Jonathan. I see nothing beyond the changes to zoning around transport hubs, previously announced, that will address the core issue of housing supply. In fact, the additional taxes on investors (multiple properties and foreign owners) may exacerbate the situation for renters. Also, I haven’t found any changes to First Home Buyer schemes, so there is no assistance for them.”
The 2024-25 NSW Budget presents a complicated scenario. Despite investments in housing, healthcare, and support for vulnerable communities, broader economic challenges persist. High mortgage costs, escalating living expenses, and pressures on the government suggest that while progress is being made, the path to economic stability and affordability in NSW is still long and winding.
Contact us at 1300 889 743 or complete our free online assessment form to see how we can assist you.
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