The recent NSW budget has estimated some respite for Sydney's surging housing prices, with NSW house price growth expected to moderate over the next year to an annual rate about 3% to 5%, down from 11% in the past 12 months.  As per the NSW budget, the recent clampdown by regulators such as the Australian Prudential Regulatory Authority is expected to ease the housing market, while new Commonwealth measures are expected to moderate activity in the housing market in 2017/18. Further, rise of an interest rate and slow wages growth expected to soothe housing demand. Another probable cause of the slowdown is a reduction in demand from foreign property buyers who will be the big losers from the NSW state budget as the government doubled the foreign investor transfer duty surcharge to 8% from 4% and land tax will increase ~$900 million in the next four years.
 
Comprehensive strategy to boost the supply of reasonably priced housing

The Government’s efforts to increase housing supply have helped deliver record dwelling approvals in New South Wales, in the 12 months to April 2017 there have been 72,800 building approvals. Currently, annual housing approvals have exceeded 50,000 a year for more than three years (40 consecutive months). Meanwhile, New South Wales is in the midst of the longest housing construction boom in the State’s history. In 2016, housing completions reached record levels of around 60,000, on average, of around 1,100 homes were completed in New South Wales every week. Further, new dwelling construction is expected to remain at elevated levels over the next two years, supported by solid population growth, low interest rates, historically high approvals and a large construction pipeline.
 
The rising cost of housing is an ongoing challenge and to ease the burden, government is implementing a comprehensive strategy that boosts the supply of reasonably priced housing, helps first home buyers get into the market, and accelerates the delivery of local infrastructure to support growing communities. Notably, from 1 July 2017, transfer duty will be abolished for first home buyers on new and existing homes up to $650,000, and reduced for properties between $650,000 and $800,000. First home buyers will also be eligible for $10,000 grants for new homes up to $600,000, and will abolish insurance duty on lenders’ mortgage insurance altogether. Additionally, it also introduces a First Home Builder Grant of $10,000 for people who build their first home on vacant land and, where the total value of the house and land does not exceed $750,000.

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