First home buyers of existing and new properties costing up to $650,000 will be exempt from paying stamp duty and will receive stamp duty discounts for properties worth up to $800,000, both from July 1, under reforms announced by Premier Gladys Berejiklian on Thursday to improve housing affordability in NSW.

The government will also remove stamp duty concessions for properties bought off the plan.

The Property Council said the government’s plan for housing affordability was a strong step in the right direction to solving the housing affordability problem in NSW.

“The crucial aspect that will define its success will be increasing housing supply,” Property Council NSW deputy executive director Cheryl Thomas said.

“Initiatives that increase demand, such as grants and tax incentives, must be matched by initiatives that boost supply and it appears the government has heeded this advice.” 

Minister for Planning and Housing Anthony Roberts said the state government’s funding of $369 million was aimed at delivering essential local infrastructure in fast-growing development precincts across Sydney and Wollongong through the Local Infrastructure Growth Scheme.

Ms Thomas said the expansion of State Infrastructure Contributions and changes to developer contributions under the Local Infrastructure Growth Scheme must take into account the myriad of other taxes and levies placed on the property industry, otherwise costs will rise and this will be seen in the prices paid for homes.

“The full exemption from stamp duty for first home buyers on new and existing houses up to $650,000 is to be welcomed, but the full exemption threshold could be increased,” she said. 

“It should reflect the median house price in most Sydney suburbs and indeed in cities like Wollongong and Newcastle that sit at around $800,000.”

The Illawarra Business Chamber executive director Chris Lamont said while recognising the challenges of housing affordability in Sydney, it was important that the government also focus on the Illawarra to assist more first home buyers and ensure more affordable housing is available in the private rental market.

The chamber has raised concerns regarding delays and the complexity of planning processes which add unnecessary expense to new residential dwellings.

“Reducing planning delays and government investment in essential infrastructure will make a difference in boosting supply and assist in reducing the cost of new houses and units,” Mr Lamont said. 

Mr Lamont said it was essential that the government continue to target and invest in measures to boost supply and, “to this end, the priority must remain on government investment in infrastructure and improving the planning system”. 

From July 1, the state government will support up to $500 million in additional borrowing by councils by halving the cost of borrowing for eligible projects through interest rate subsidies.

They say this will fast-track housing supply by giving councils greater certainty in delivering essential infrastructure such as roads, storm water drains and open spaces. 

Alex Frino, Professor of Economics at the University of Wollongong said the reforms to fast-track housing supply and the finance to fund infrastucture for the purposes of releasing housing supply was a “very good measure” for the Illawarra region.

“If we look at the Illawarra, house price growth in the past five years has been about 60 per cent, and house price growth in Wollongong, the centre of the Illawarra, has also been about 60 per cent,” he said.

“So house prices in the entire region have been growing very strongly.

“For the Illawarra region, because the fringes are growing as fast as the centre, this is a very good measure because you’re going to release housing at the fringes, release pressure on house prices at the fringes and that will feed through to the centre.”