Property experts from across the country are urgently pushing for stamp duty reforms to expand housing supply which they argue is at a critical shortage.
Leading property commentator, Terry Ryder from hotspotting.com.au, claims bureaucracy has resulted in a supply shortage the likes of which Australia hasn’t seen before.
He advised, “A significant factor behind the price of property is the balance between supply and demand.
“We are seeing now in Australia an unprecedented demand for property and nowhere near enough supply.
“There have been many academic studies over the years that have found a direct link between stamp duties and a reduction in the turnover of a property. Put simply, stamp duty is a significant charge and can be a large deterrent for the market.”
Property expert Jason Paetow, Managing Director of AllianceCorp, agrees that stamp duty is creating a barrier for buyers that is reducing stock on the market.
Said Jason, “At present, national stamp duty costs are equivalent to 4.2% of the median dwelling prices – and in Victoria, that sits as high as 6.5%, the most costly stamp duty rate nationwide.
“This is a significant cost when you consider the average property price in Melbourne is $975,000, resulting in a whopping stamp duty bill of $58,000.
“With such large prices at hand, this has generated considerable implications on buy and sell transactions as it creates a barrier for people looking to upsize, downsize or relocate and therefore reduces stock on the market.”
Jason advised that the property market in Australia has rapidly evolved and the role of levies and duties, and their impact on overall affordability, should be reviewed.
Said Jason, “When looking at the market landscape in the 60s and 70s, where properties were two to three times more than the average income, we have now well exceeded this with additional levies and duties implemented by the Government, consequently hindering the Australian dream.”
Ryder is blunt in his assessment of the situation, taking aim at state governments.
“Australian homeowners are being stung – there’s no two ways about it.
“Between the three levels of government, there is stamp duty, GST, capital gains tax, land tax, infrastructure charges, application fees and various other fees and levies.
“As an example, the taxes, fees and charges lumped onto the cost of producing a new house and land package can be massive, accounting for between 30 – 50% of the cost of a new house on land, depending on the location.
“The developer will have to pass those costs on to the homeowner which will further inflate the price of a new build.”
Ryder maintains that state governments should be responsible for driving change.
Said Terry, “The Federal Housing Minister, Michael Sukkar, commented earlier in the year that the states need to be the catalyst for change when it comes to addressing housing affordability and he’s largely right.
“State governments have a real opportunity now to make a change that is urgently needed.
“This isn’t just about getting first homeowners into the property market. This is also about encouraging investors to buy property and ensure we have enough rental stock.
“The shortage of rentals in many parts of Australia is dire with vacancy rates in some areas well below 1%.
“There’s a real opportunity here for government to implement investment policies that will inspire people to buy or build rental properties.
“That sort of progressive thinking is a win-win situation as it will boost the nation’s economic recovery post-Covid but will also alleviate the current pressure on the rental market.”