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Queensland has ignored the ‘elephant in the room’ – stamp duty – while News South Wales has splashed out big on housing reform and affordability.
In two state budgets released today, New South Wales has gone ahead with its plan to phase out stamp duty while it’s neighbour to the north has left the tax alone.
First-home buyers will be able to opt-in for a smaller annual property tax, while in a bid to improve housing affordability, $2.8 billion is being spent on a shared equity trial.
The shared equity scheme applied to single parents, older singles, frontline workers and first-home buyers, running as part of a two-year trial.
The alternative to stamp duty in NSW will be made available to first-time buyers purchasing a home up to the value of $1.5 million.
Buyers opting out of paying stamp duty will pay $400 plus 0.3 per cent of the land value per year.
Housing, along with women and infrastructure, were the biggest recipients of the government’s largesse in NSW in a budget with a deficit blown out to $11.3 billion, far exceeding the $3.6 billion deficit predicted in the 2021-22 half-yearly review.
It was a different story in Queensland, where the Real Estate Institute of Queensland (REIQ) expressed disappointment at the lack of action to support housing affordability and accessibility in the 2022-23 State Government budget.
REIQ CEO Antonia Mercorella said the elephant in the room – stamp duty reform – had again been ignored.
“The Henry Tax Review, delivered over a decade ago, identified it as a ‘bad tax’ and yet it remains with us with today with not even a whiff of a plan for stamp duty reform on the horizon.”
She said this year’s budget had missed a valuable opportunity to implement key reforms and bring forward creative solutions to assist Queenslanders towards home ownership.
“Despite a construction sector in crisis, and the government itself conceding that builders and building supplies are rare as hens’ teeth, the First Home Owners’ Grant continues to overlook established housing, remaining restricted to new construction,” Ms Mercorella said.
“With rising construction costs and financial entry barriers making building or purchasing a brand-new home is simply unfeasible for many first-home buyers, surely it’s time to extend this initiative to established housing options.
“In addition, given that we are in the throes of a rental crisis, support measures should be going further to help more renters transition into home ownership by providing some upfront financial assistance and opening up access and choice to include established housing.”
Despite the NSW Government targeting stamp duty, the REINSW CEO Tim McKibbin said replacing it with an ongoing property tax was not the right solution.
“The proposed reform will give buyers an extra factor to consider and another calculation to make.
“Whenever a tax is a consideration of a transaction, not merely a consequence of it, then we believe it falls under the label of a ‘bad tax’,” he said.
Tale of two states
In the past two decades, the share of first home buyers under 35 years of age has declined from 67 per cent to 61 per cent.
NSW Treasurer Matt Kean said the NSW Government was allocating $728.6 million over the next four years to help first-home buyers get a foot on the property ladder.
“We know that first home buyers are being forced to enter the property market later in life and this reform will make the property market more accessible for them,” Mr Kean said.
“It will mean more New South Wales residents will get into their first home at an earlier age and achieve the great Australian dream of home ownership.”
For an NSW household on the median income that saves 15 per cent of its income, stamp duty adds about two years to the time required to save the up-front costs of the median NSW dwelling.
“Together with existing first home-buyer initiatives, the Government will offer support to about 97 per cent of all first-home buyers, or about 55,000 people per year.”
Public transport is also receiving a big boost with more than $200 million invested into completing the first two stages of the long-awaited Parramatta Light Rail.
More than $12 billion has also been put towards constructing the Sydney Metro West which will be an underground train tunnel connecting Parramatta and Sydney’s CBD.
NSW’s big spending budget differed markedly from Queensland’s.
A Queensland budget surplus of $1.9 billion in 2021/22 is expected to fall to a deficit of just over $1 billion in 2022/23.
New housing policy was limited to the allocation of $29.8 million over four years to address youth homelessness.
There was no substantial increase to last year’s budget commitment to deliver 7,400 new properties for social housing by 2025.
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