Two major parties’ plans to scrap stamp duty for eligible first-home buyers fail to adequately address housing affordability, a housing expert said.
Their comments come following a warning from the Property Council of Australia that further reform is needed to open up more housing across the state.
Cameron Kusher, PropTrack director of economic research, said though likely not as inflationary as the Perrottet government’s scheme, which allowed first-home buyers buying properties under $1.5m to choose between paying upfront stamp duty or an annual land tax, eliminating stamp duty for first-home buyers paying up to $800,000 could fire up demand and raise property prices, The Daily Telegraph reported.
Adina Cirson, acting NSW executive director, said that while the Property Council welcomed Labor’s proposal, which could see more than half of properties listed for sale in the state eligible for free stamp duty, more work was needed to tackle the root cause of housing affordability.
“The single biggest step both major parties can take to fix the housing affordability crisis is to increase housing supply,” Cirson said.
She said the Property Council had urged both major parties to work in consultation with the property industry to “create a more sustainable, equitable, and efficient property tax system.”
“NSW Labor should be cautious in seeking to abolish the land tax option for first-home buyers without considering the need for broader property tax reform,” Cirson said. “Our outdated system of property taxes and infrastructure charges only serves to make housing more expensive for families in NSW.”
Kusher said the scheme, which doesn’t apply to vacant land, didn’t tackle housing supply at all, The Daily Telegraph reported.
“We’ve seen this over and over again from governments,” he said. “It’s much easier to stoke demand than make meaningful changes to supply. In the past, these kinds of grants and stamp duty waivers have tended to drive more demand. They are popular with the community, but they do tend to push up prices.”
Kusher believed the scheme would have an inflationary effect on property but wouldn’t create a boom.
“We’re in a market where prices are falling,” he said. “It will encourage some people to make the foray into homeownership, but I don’t think we’re going to see a mass wave of people jumping to buy a home on the back of this and pushing up prices. Even though rents are going up, it’s still, in most instances, cheaper to be renting than paying off a mortgage because of how high interest rates are.”
Kusher said the current government’s stamp duty reform had more potential to boost demand and property prices due to its appeal to those looking to buy or build more expensive properties.
“It’s based on land value up to $1.5m, once you’ve factored in the build price, the final price of the property could be about $2m,” Kusher said. “Once you’re getting overspending $1m on a house, the question is, do you really need that assistance?”
Labor’s proposed scheme, on the other hand, would appeal more to people on lower incomes buying at the lower end of the market, as the scheme applies to properties at a smaller price bracket.
“In some ways, the Labor Party’s policy is better targeted at those people that really need it and probably wouldn’t have the potential to be as inflationary on prices as the Perrottet government’s scheme,” Kusher told The Daily Telegraph.
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