Political momentum builds for first home buyer support

Joe Hockey has put the issue of first home buyer relief back on the table after releasing a tax discussion paper.

The federal Treasurer announced that he wants to discuss housing affordability when he meets his state counterparts in two weeks.

“I am very concerned about the ability of young Australians to be able to afford their first home,” Mr Hockey said at a press conference yesterday.

“It is in many ways a great stabiliser for communities and families, but also importantly it's a very advantageous form of saving – long-term saving in your family home.

“It provides a stability that many want and it's been a traditional Australian right to own your own home, and it's just become more and more difficult for people to own their first home.

“So we've got to nut out, in conjunction with the states, better opportunities for young Australians – or any Australian.”

This is the second time in three weeks the Treasurer has put housing affordability on the agenda after raising the idea of allowing first home buyers to access their superannuation.

The tax discussion paper that was unveiled yesterday didn’t directly address the issue of first home buyers, although it did cover stamp duty.

The paper said stamp duty represented 24 per cent of the states’ income, making it their number two source of revenue.

It described stamp duty as an inefficient tax that scoops up more and more revenue as property prices rise.

“This clearly adds to transaction costs and contributes to Australia’s high (by international standards) costs of moving,” it said.

“These costs can discourage householders from moving to housing that best suits their needs and can be an important barrier to labour mobility.”

The tax discussion was also critical of land tax, which it said operates from a narrow base because of tax-free thresholds and many exemptions.

“This results in forgone revenue and distorts land use,” it said. "For example, levying land tax at progressive rates on total landholdings leads to higher taxes on large landholdings, compared to smaller landholdings.

“The OECD argues this introduces a bias against large investments in residential property and discourages institutional investors from investing in private rental housing.”

[Related: Has the first home buyer crisis been exaggerated?]

 

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