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Vendors are starting to hike the prices of their properties following the NSW government’s newly announced measures to address housing affordability, says a real estate group concerned that prices could be artificially driven up.
Starr Partners CEO Douglas Driscoll says some vendors with his group have deliberately priced their properties between $650,000 and $800,000 in the belief that first home buyers will have more money to spend.
“When first home buyer grants were introduced a few years ago, as a group, we saw the same thing. The market needs to find its natural level, otherwise these measures could prove counter-productive and possibly even lead to an artificial increase in prices,” Mr Driscoll said.
“The state government needs to protect the cash cow that is stamp duty, but also make an attempt at solving the affordability crisis. If the intention is to alleviate affordability woes amongst first home buyers, how did it reach the figure of $650,000?
“This tells me the measure was designed to drive more first home buyers into apartments. With far fewer investors as a result of the macroprudential measures and tens of thousands of new apartments in the pipeline, who is going to buy them otherwise?”
Mr Driscoll said first home buyers account for approximately 4 to 5 per cent of the market. In order to properly address housing affordability, the percentage needs to enter the double digits, which may not be achievable with the new measures.
“If the government was serious about alleviating barriers, it would completely abolish stamp duty for first home buyers or at the very least make the first $650,000 exempt, irrespective of the purchase price, and not cap it at a price that forces people into apartments to reverse engineer the cycle,” he said.
Mr Driscoll also said rentvestors could abuse the housing affordability measurements, and should be living in the property they buy to be eligible for the stamp duty exemption.
“However you spin it, rentvestors are still investors, and we have been overly advocating rentvesting as a wealth strategy, which is taking its toll on the market,” he said.
“The base of the affordability iceberg is that there have been too many investors in the market and unless we’re careful, these measures could inadvertently make things worse. It is further exacerbating the problem which APRA has tried so hard to alleviate.”
“If the government is not open to completely abolishing stamp duty for first home buyers on all properties, concessions should at least be tracked against median house prices annually. House prices are relative against the cost of living. Someone in the eastern suburbs might pay more for property compared to someone in western Sydney, but they are usually paying more for everything, not just property. Therein lies the problem – the affordability crisis is a Sydney issue, not necessarily a state issue.”
Mr Driscoll said first home buyers in regional NSW will benefit the most from the government’s measures, but buyers in Sydney’s inner west, lower north shore, eastern suburbs and southern areas will miss out.
“If you are looking to buy in these areas and hoping to benefit from the abolishment of stamp duty for properties up to $650,000, you can either uproot your life, don’t buy at all or buy a garage.”
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