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The key to housing affordability is supply, which means unlocking existing properties held by retirees as well as building new homes, an industry body says.
Housing supply is tied to unlocking property held by retirees and upgraders who are choosing to stay put due to the cost of stamp duty, according to the Real Estate Institute of New South Wales.
REINSW president John Cunningham says comments by NSW Premier Gladys Berejiklian that she is open to tax changes to improve supply and housing affordability are a step in the right direction.
“Buyers are now forking out over 4 per cent of the value of a property on stamp duty and this is stopping the supply of established homes flowing into the market,” Mr Cunningham said.
“This problem has been caused by successive governments who failed to address stamp duty bracket creep for over 30 years.”
Mr Cunningham said providing stamp duty incentives to encourage older Australians to downsize will result in more properties entering the market.
“There would be a chain reaction. One transaction can set off a chain reaction that leads to 10 sales. If we get the supply of existing properties flowing, then the price pressure will be eased.”
He proposed the NSW government provide retirees with a 50 per cent reduction in stamp duty for a residential property purchased to replace an existing residential property up to the value of $1 million.
“In combination with this strategy, there needs to be genuine and compelling incentives for all buyers, including retirees, to relocate to regional areas in order to ease the pressure on the Sydney market,” Mr Cunningham said.
Meanwhile the Housing Industry Association (HIA) said new dwelling starts hit record levels in 2016, but the latest ABS data suggests a decline has begun.
New dwelling commencements fell by 2.8 per cent during the September 2016 quarter, in seasonally-adjusted terms, to 55,070. Detached house starts were down by 1.8 per cent, while multi-unit commencements dipped by 3.9 per cent.
Over the year to September 2016, new dwelling commencements totalled 229,336.
“The result for the September 2016 quarter represents the second consecutively quarterly decline in new dwelling starts, with a substantial portion of the reduction happening on the multi-unit side,” HIA senior economist Shane Garrett said.
Mr Garrett said the HIA expects the higher density market will have to absorb the bulk of the reduction, especially since new home building is set to move lower in the next few years.
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