The tentative signs of economic recovery in NSW should be preserved with an extension of stamp duty stimulus for new homes, according to the Property Council of Australia.
NSW Deputy Executive Director Glenn Byres said today there was a clear case for the NSW Government to extend the 50% cut in stamp duty on new dwellings announced in this year’s Budget beyond the current expiry date of 31 December 2009.
The Property Council today launched its campaign to see the stimulus extended and adjusted with a submission to Government.
"The case for continuing the stamp duty concession is clear and we hope the Government will move quickly to send a pro-investment signal to the market," Mr Byres said.
"It is good for the economy in the short-term and good for housing affordability and the rental market in the long-term.
"Signs are emerging of economic recovery and renewed activity in the housing construction market – but they are tentative at best.
"We are coming off a 50-year low in construction levels and whatever gains have been made in recent months, they still leave NSW well short of normal market conditions.
"NSW needs to carefully navigate a path back to sustained growth and that means stimulus measures encouraging investment and jobs should remain in place given the housing construction market is critical to the overall performance of the State’s economy.
"Only $7.3 million of the $64 million originally allocated for the initiative has been spent. That suggests it needs more time to work, and its extension won’t affect the Budget bottom line.
"It also fits long-term policy objectives. The Sydney Metro Strategy forecasts that Sydney needs at least 25,000 new dwellings each year to meet the demands of inevitable growth.
"Yet in 2008-09, only 13,703 new dwellings were approved in Sydney – a shortfall of over 10,000 in one year that has only exaggerated existing supply shortfalls.
"Continuing stamp duty concessions now mean we can continue to bring new supply to the market and build back towards the targets Sydney and NSW need to meet.
"It’s critical if we are going to improve housing affordability, make available new rental accommodation and give ourselves the capacity to meet population growth."
The Property Council has also recommended the NSW Government:
• Adjust the eligibility for stamp duty exemption to remove the sharp price distinction between properties valued over or under $600,000. The current threshold sits right on the median price of new homes. The Property Council believes tapering the concession, along with its extension to homes sold above the threshold, will better allow the market to operate without distortions
• Adopt the Victorian model of stamp duty concessions which means it is not applied to off-the-plan purchases, or only on the value of work done on the day contracts are exchanged. Since its introduction in 2000, the model has given Victoria a sharp competitive advantage in maintaining housing construction activity.
"When it announced the stamp duty concession in the Budget, the NSW Government said it would review the case for its extension beyond December 31 this year," Mr Byres said.
"We hope they do so quickly, and move to adopt a policy position that keeps alive hope of economic recovery and gives NSW the additional housing stock it needs long-term."
Media contact: Glenn Byres, NSW Deputy Executive Director, 0419 695 435 or 02 9033 1907.