First homebuyers in NSW are hoping additional stamp duty relief and a boost to housing supply will allow them compete with investors who are about to be slugged with higher taxes.
People purchasing a first home won't pay stamp duty on new or existing properties worth up to $650,000 from July, under reforms announced by Premier Gladys Berejiklian on Thursday.
At present, stamp duty relief only applies to brand new homes.
First homebuyers will also receive stamp duty discounts on homes worth up to $800,000, while stamp duty on lenders' mortgage insurance will also be abolished altogether.
Housing approvals will be fast tracked, the government says.
Central Coast prospective first homebuyer Ben Cowan, 27, praised the changes.
"I think it'll drive down prices and allow people my age to finally purchase a home," he told AAP.
Mr Cowan said the growing gap between wages and house prices had become "ridiculous".
"We would have liked to enter the housing market five years ago but we had to push it back," he said.
"It's pretty depressing. In my group of friends, only one or two people own their homes."
The relief for first homebuyers comes at the expense of domestic and foreign investors.
Foreign investors will have their stamp duty surcharge doubled from four to eight per cent and land tax hiked from 0.75 per cent to two per cent.
All investors purchasing off the plan will lose their stamp duty concessions.
"This is a huge win for people aspiring to own their first home in NSW," Ms Berejiklian told reporters in Sydney on Thursday.
"This will provide a once-in-a-generation opportunity for first homebuyers to get their foot in the market."
NSW will also commit to additional infrastructure spending "from government, councils and developers to accelerate the delivery of new housing", the premier said.
The Urban Development Institute of Australia NSW warned additional charges for foreign buyers would cause long-term price increases.
The institute warned a drop-off in foreign buyers could jeopardise large development projects, which are often funded by presales to foreign buyers, and increase undersupply in Sydney.
"Even though foreign buyers are only 11 per cent of the market that could be enough to prevent thousands of new homes being built for Australians," chief executive Steve Mann said in a statement.
Sydney Business Chamber's western Sydney director David Borger believes the package is a good start, but says local governments will need to work with the state to ensure young people can get a foot in the door.
"For many years local government has considered housing affordability as someone else's problem," he told AAP.
"It's everyone's problem. They need to put forward precincts for rezoning and development to create affordable homes for our young people."
