With its promise to focus on social infrastructure, the South Australian government’s budget announcement has garnered a mixed reception from the property sector.
The budget announcement on Tuesday (22 June) from South Australian Treasurer Rob Lucas will deliver a massive $17.9 billion in infrastructure spending over the next four years, particularly on health, education, sporting, cultural and recreational facilities.
With a strong focus on health, education and economic recovery, the state budget could ultimately serve “as an economic blueprint that will put hard hats and steel caps on workers now and into the future, helping to transform South Australia’s skyline”, according to Property Council SA executive director Daniel Gannon.
“Importantly, the budget strives towards making Australia’s ‘most liveable’ city the nation’s most attractive place to invest and do business,” Mr Gannon added.
“South Australia is well positioned to re-emerge from COVID with social infrastructure that attracts investment, people and world-leading activities.”
Among the elements of the budget’s infrastructure investment are the $662 million Riverbank Arena and the $800k CBD reactivation program — all of which are aimed to improve the competitiveness of Adelaide and the rest of South Australia.
Master Builders SA chief executive Will Frogley also welcomed the announcement, saying that the budget commitment could make way to a strong pipeline of future work and “enable South Australia’s hi-vis, tradie-led social and economic fightback to continue”.
In addition to social infrastructure spending, the SA budget also features an extra $10.7 million in additional land tax relief over 2021–22.
According to Mr Gannon, tax reforms could ultimately increase the state’s attractiveness and set South Australia up for “a golden era of investment attraction”.
Acknowledging the positivity and hype around the infrastructure boost, Raine & Horne South Australia general manager James Trimble has expressed concern that the SA government has missed an opportunity to free up a number of Adelaide’s most tightly held housing markets.
According to Mr Trimble, despite the massive commitment to infrastructure spending, more needs to be done to boost the supply of properties.
“We need to look at ways to boost the supply of properties, and one option is a stamp duty break to encourage empty nesters to move out of superfluous family homes in metropolitan Adelaide,” he stated.
The general manager acknowledged that transaction costs associated with selling an existing home — and buying a smaller property, whether that be in Adelaide or the regions — “are major financial hurdles for many older South Australians”.
“They feel it’s time to move on and allow younger buyers to enjoy the fruits of the house and neighbourhood they have enjoyed with their families. But they are being forced to remain in the empty nest because of the costs of downsizing,” Mr Trimble said.
“Older home owners are doing their sums, and downsizing doesn’t stack up after taxes such as stamp duty on their next home are included.”
From his perspective, it’s “worth costing up” a stamp duty tax break for empty nesters over the age of 65 who are looking to sell an Adelaide property, especially as the state’s Treasury coffers are “overflowing” — thanks to the property market boom, which has generated a stamp duty windfall of more than $200 million.
The Treasury is also benefiting from an almost billion-dollar boost ($926 million) to its accounts, thanks to goods and services tax (GST).
“Any potential loss of income from a stamp duty break for downsizers could be offset by the first home buyers and upgraders who can buy these well-located yet tightly held Adelaide homes,” Mr Trimble concluded.