Buyer Incentives, Current Concessions And Beyond
You do not need to look very far to see the many marketing campaigns across the Sydney markets that are flagging the current stamp duty concessions for NSW. And NSW is not alone. There are varied buyer incentives in place across Australia.
If you need a quick national up-date of what’s on offer then this is a useful link:
For NSW the current incentives from 1 January 2012 are focussed on stamp duty concessions for new homes up to $600,000 (existing homes are no longer included) and land with a price ceiling of $400,000. The NSW scheme is only for first home buyers of a new home or a vacant block of residential land intended for a first home.
The new home must not have been previously occupied or sold as a place of residence, but does include substantially renovated homes. The rules for the purchase of a vacant block of residential land state that the land must be used as the site to build a first home.
The $600,000 limit applies in the case of a new home purchase or an off-the-plan purchase.
Looking at land it is worth noting that there is no time limit on how long it takes to commence or complete building, as long as the authorities are satisfied that the block is intended to be used to build a new home only for the first home owner.
Buyer Incentives The Wider Picture
Incentives are now among the many factors that will impact price expectations.
While incentives or concessions in some form or another are a major part of the residential market across Australia, they do vary. In late 2008 for example, when the Rudd Federal Government introduced its boosted First Homebuyers Grant (FHB) of $21,000 and the State Government in NSW added another $3,000, and as stamp duty for first time buyers was reduced, some buyers ironically thanks to the GFC, were suddenly looking at incentives that were very valuable.
At the time these incentives were not revolutionary and it has frequently been suggested that the FHB Grant should in fact be permanently closer to $30,000 and that all Stamp Duty on homes below $1,000,000 should be removed for good.
Direct financial incentives in the property market are a significant and ongoing topic of discussion. But they always create tangible impacts on market activity, and at times the impact can have a degree of distortion. As result developers can find it necessary to add further incentives to the marketing mix and not just incentives aimed at first time buyers.
But how do buyers react to such incentives, in particular to non-government incentives? What ways should they be used in the promotional mix? There may be pitfalls when the incentives are either reduced or no longer available.
It now appears that in some form or another, incentives are always there as part of the marketing tool-kit and they simply change to meet market expectations and shifting buyer sentiment.
It could very well be a reality that in the foreseeable future such incentives, in particular as a structural policy of government, will be a fixture of the housing market.
Should this be seen as surprising or alarming? Not really. After all buyer incentives are a part of almost all free-markets; From coupons (a way of life in the USA), two for one offers, petrol savings, loyalty cards, discount sales to the ever popular frequent flyer points. From a marketing viewpoint the list is more or less endless.
For the property market, incentives are at times associated with tough times. But is this the reality? Can it be more constructive to consider incentives as a valid part of a normal promotional mix? From the buyers’ perspective I believe the answer is yes. It’s part of the way consumers see markets working.
It could after all be argued that even being on an early VIP release list with a developer or project marketer (such as the Colliers International “Be the first to Know” VIPs) is a form of incentive, as it implies an advantage of time and possibly price.
If incentives are well considered sales can be encouraged, reducing the time on market and holdings cost for the developer.
My view is that when developer incentives are used they should be seen as valid and planned marketing tools not an emergency first aid band-aid or quick fix.
The same applies to government incentives. They should also be used as a means of positive leverage. They are common across the economy and any buyer should be on the look out for the advantages they offer.
If such an approach is used it enhances the positive use of all incentives so that they are applied in the most constructive manner, not in a reactive way to rescue this or that circumstance.
Have you purchased a property and received an incentive, from the government or developer and if so, what was your experience?