The exorbitant cost of stamp duty in NSW is the most significant barrier to the purchase of property in the state, according to Laing+Simmons Managing Director Leanne Pilkington and the Property Council of Australia (NSW).
Despite the NSW Government on track to gain $4 billion in surplus believed to be largely in part to stamp duty, as announced in the Treasurer's half yearly budget update, Ms Pilkington said it can't last forever, issuing a warning that a growing list of people can’t afford to move which increases the pressure on property prices.
She said people find it cheaper to stay put and renovate than move, reducing the amount of stock on the market, irrespective of the number of new developments springing up in certain areas.
“Stamp duty is one of the most significant influences on property price growth in NSW," Ms Pilkington said.
"It contributes to fewer listings, so transactional activity suffers, and the flow-on impacts are felt down the supply chain: household goods suppliers, homewares retailers, white goods manufacturers...the list goes on.”
According to CoreLogic RP Data, the amount fresh housing stock being added to the market has been consistently and substantially lower than the past two years, with the shortage of advertised stock most pronounced in Sydney.
Total advertised stock levels are currently 10.2% lower than a year ago and there are approximately half as many advertised properties on the market compared to the 2011 peak of over 40,000.
“As well as holding back fresh stock and fuelling unsustainable price growth, stamp duty also jeopardises employment opportunities in the real estate industry as reduced transaction volumes means agents simply aren’t able to employ new people,” Ms Pilkington said.
“Stamp duty is a short term revenue booster with disastrous long term consequences that we are already seeing play out, most noticeably in the affordability crisis we are currently faced with.”
Supportive of this position is Property Council of Australia NSW Executive Director Jane Fitzgerald, who said the 4 billion dollar surplus indicates solid economic growth for NSW yet the state’s reliance on stamp duty is to the detriment of NSW families trying to buy a home.
“This budget update encapsulates the worst of stamp duty – it keeps house prices high while reducing market mobility in a softening market,” she said.
“If the NSW stopped its reliance on stamp duty and instead looked at other ways to raise revenue, then house prices would come down and affordability would improve.
"If you reduced stamp duty by 50 per cent, you would knock over $17,000 off the existing price of a median priced home in Sydney."CoreLogic RP Data recently reported the median dwelling price in Sydney rose 13.1 per cent in 2016 to $845,000. This would incur stamp duty of $33,515, exclusive of mortgage and transfer fees.
"The NSW Government cannot rule out stamp duty reform forever if it serious about helping people, especially young people, enter the property market," Ms Pilkington said.
The Property Council said growth and investment are most welcome, but it's time to see if other revenue options are available to safe guard the budget against the ups and downs of the property market.
"Our State’s budget should not be at the mercy of stamp duty revenue," Ms Fitzgerald said.
“The Government should be commended for delivering record levels of investment in infrastructure and now is the time to start looking ahead to more investment in heavy rail, light rail and freight options to enable high growth and so the District Plan job targets can be met."
