Spotlight on property in the NSW Budget

There were two important property-related announcements this week, with the RBA delivering the results of its latest board meeting and the state government delivering the annual NSW Budget.

The RBA elected to leave the cash rate unchanged at 4.35 per cent, which came as little surprise given that inflation remains above target and is proving persistent. While inflation has fallen substantially since its peak in 2022, with higher interest rates helping to balance supply and demand, the pace of decline has slowed and is still some way above the midpoint of the 2–3 per cent target range. Given these figures, there’s a real danger that we could see another rate hike this year, with the RBA leaving the door open to an increase if inflation fails to come to heel. Sadly, many industry pundits are predicting that we won’t see falling interest rates until well into next year.

Within the Budget there were some notable changes to the property landscape. From 1 January 2025, overseas purchasers of NSW property will see an increase in the purchaser duty surcharge from 8 per cent to 9 per cent. But that’s not all – from the 2025 land tax year, the foreign owner land tax surcharge will also increase from 4 per cent to 5 per cent, which is expected to raise $188 million over the next four years.

In making these changes, the Minns Labor Government is hoping to strike the right balance between the benefits of foreign investment and the need to ensure those investors are contributing back to housing and infrastructure across NSW.

There are an estimated 20,000 foreign-owned residential properties in NSW, which is equivalent to around 0.6 per cent of the state’s stock of properties. The increase is expected to encourage more properties to be made available to NSW residents and to ensure that overseas investors buying homes in NSW are also contributing to the cost of building other homes and the necessary infrastructure to support them.

ChanYahl have secured the street record with the recent sale at 25B Orinoco Street Pymble. This stunning Mediterranean inspired residence with tennis court and pool is privately nestled on an impressive 7,322sqm and was the former residence of Australian tennis champion John Newcombe.