Eliminating stamp duty for the off-the-plan purchase of new homes will help drive housing supply across Sydney and NSW, according to the Property Council of Australia.
The two-year abolition of stamp duty on off-the-plan purchases of homes in the pre-construction phase – alongside stamp duty cuts for seniors downsizing and the purchase of new homes – was announced in today’s State Budget.
Stamp duty discounts for off-the-plan purchases formed a centrepiece of the pre-Budget submission from the Property Council of Australia.
“We need new solutions if we are going to close the supply gap and tilt the affordability equation back in favour of homebuyers,” NSW Acting Executive Director Glenn Byres said.
“The Government has done the right thing in recognising that cuts to stamp duty targeted at new homes will drive supply and lend a hand to homebuyers.
“Sydney faces an enormous task in providing 26,000 new homes a year to accommodate the inevitable growth in population.
“Stamp duty cuts targeted at new homes elevate the prospects of bringing forward supply that fits the demands of the Metropolitan Strategy.
“Modelling commissioned by the Property Council from BIS Shrapnel showed NSW could create 4000 new homes a year by duplicating Victoria’s regime of stamp duty cuts for off-the-plan purchases.
“Victoria now averages more new homes than NSW each year, exceeds NSW in the apartment market and leads in investor loans for construction of new dwellings.
“The two-year abolition of stamp duty for off-the-plan purchases and other stamp duty initiatives will help recalibrate our competitive position.
“It is also essential in helping home building companies to bring projects to market by allowing them to meet the pre-sales requirements for finance.
“We will be urging the Government will review the success of the stamp duty cuts after 12 months, particularly to test the relevance of the threshold.
“The median house price in Sydney sits around $600,000 so we need to ensure the threshold strongly reflects the appetite of the market.”
Stamp duty cuts follow initiatives announced last week to drive housing supply, including:
· Strict enforcement of a cap for local development contributions of $20,000 per residential lot
· Using IPART to rigorously assess section 94 plans, annual rate caps and special rate variations
· A Housing and Land Supply Coordination Taskforce
· Funding to accelerate the delivery of Local Environment Plans (LEPs), and reward councils that efficiently assess development applications.
“Surging revenue from property taxes has helped lift the Budget back into surplus – and is expected to swell further in coming years,” Mr Byres said.
“Transfer duties will soar from $4.049 billion to $4.96 billion over the next four years – and land tax will escalate by over $300 million over the same period.
”We hope the Budget marks the first movement towards an embrace of a simpler, more efficient tax system in NSW.
“The Henry Review made clear the case for reform – and the abolition of stamp duty for over-65s recognises that transfer duties act as a brake on the efficient use of property and sensible investment decisions.
“The new ad valorem tax – effectively a secondary stamp duty – remains a black mark on the Budget and should be ditched.
“It won’t only reach residential projects – but will significantly add to the cost of bringing industrial parks, retail centres and commercial office space to life.“
Media contact: Glenn Byres, NSW Acting Executive Director, 0419 695 435.