Leaders from across the real estate industry have commented on NSW’s budgetary measures intended to address the state’s housing crisis.
According to the Real Estate Institute of NSW (REINSW), Premier Dominic Perrottet’s stand-out housing initiatives – an opt-in alternative to stamp duty for some first home buyers, and the trial of a government-backed shared-equity scheme – are more of a bandaid on the issues facing the state.
The industry’s peak body in the state said that while it welcomed the focus on housing affordability, “the budget misses several opportunities, including addressing the supply shortage and stamp duty bracket creep”.
REINSW chief executive Tim McKibbin commented that, ultimately, the measures were too narrow in scope to have a substantive effect.
“The measures announced in the budget apply only to first home buyers and in the case of the shared equity reform, only to those in select occupations.
“Limiting the shared equity scheme to a specific group of people seems unjust and there might be some market distortion, and the sub $1.5 million segment of the market may come under additional pressure, assuming the reforms result in an increase in first home buyer demand,” Mr McKibbin said.
The body sees the market’s current inability to meet already-strong demand with sufficient supply as “the crux of the affordability problem”, according to Mr McKibbin. And in his view, “there is nothing in these proposed reforms which address the critical shortage of supply”.
Cameron Kusher, the director of economic research at PropTrack, agreed that the stamp duty program, called the First Home Buyer Choice scheme, had its limitations in terms of market impact.
“The new scheme is targeted only at the first home buyer market, which is the smallest cohort of buyers,” Mr Kusher noted.
“Another limitation is that the scheme is only payable to first home buyers who choose it and it will not apply to subsequent purchasers of a property.”
But he also described the move as “encouraging”. It’s his belief that the introduction of the program might pave the way for expansion, and he suggested other buyers such as the home’s subsequent owners and investors could be next in line.
“Hopefully this is the first step to broader stamp duty reform in NSW,” he said, adding that it was heartening to see states acknowledge what a high barrier to entry stamp duty posed.
Others, such as Mathew Tiller, LJ Hooker’s head of research, used stamp duty’s moment in the limelight to question whether states should be relying so heavily on real-estate-related taxes in the first place.
Even the switch to a land-tax-based system “continues to impose a high tax burden on housing, adds cost to purchasing a home – replacing one tax with another tax”, Mr Tiller said.
“We would prefer reform that reduced the overall tax burden that is placed on real estate and improves affordability,” he said.
And Nerida Conisbee, Ray White’s chief economist, also noted in relation to Mr Perrottet’s stated wider plans for stamp duty reform that relying on the lump-sum tax as a large source of state revenue placed governments in unstable territory, given that annual intakes are reliant on the health of the market.
“Although a major source of revenue, it is highly volatile,” she said.
Ms Conisbee used the previous years’ reports by way of example: “In 2021, the NSW government received $9.6 billion from stamp duty and this accounted for 25 per cent of total tax revenue. It was the highest level of stamp duty revenue ever recorded and was driven by particularly strong price growth and property sales in that year. In 2020, stamp duty revenue was 28 per cent less.”
A broader switch to land tax, she said, would result in lower state revenue but ultimately make annual projections more reliable.
For many in the industry, however, the fact that the state seemed to be making a concerted effort to forefront housing in its latest financial plan ultimately came out in the industry’s favour.
Property Council NSW executive director Luke Achterstraat said the measures relating to housing supply, stamp duty and shared-equity schemes were “clear indications that the government has put housing at the top of their priorities”.
“It’s great to see the NSW government’s commitment to help Australian’s achieve home ownership and put housing front and centre,” Mr Achterstraat said.
Ruwin Perera, co-founder of Aussie property management agency :Different, echoed these sentiments.
“Yesterday’s NSW budget announcement has included several strong reforms for the property industry. We welcome the stamp duty changes as it costs a lot to own a home and stamp duty makes it harder. Allowing first-home buyers to opt-in for a smaller annual property tax is a great step to getting them on the property ladder as it will ultimately save them thousands on upfront costs.
“The government’s fresh take means more Australians will be able to achieve the great Australian dream of owning a home sooner,” Mr Perera said.
ABOUT THE AUTHOR
Based in Sydney, Juliet Helmke has a broad range of reporting and editorial experience across the areas of business, technology, entertainment and the arts. She was formerly Senior Editor at The New York Observer.