The state government must recognise the key contribution retirees can play in the housing affordability issue by providing incentives for the sale of the family home.

As part of a review of its Real Tax Policy ahead of the June 2016 NSW Budget, REINSW has called on the state government to make amendments to stamp duty for retirees.

Unfortunately for many of our retirees, the prospect of selling their existing property and relocating to a property that better responds to their current requirements is subordinated to the cost of the stamp duty involved with relocating.

Stamp duty is seen as money thrown away in the transaction, and for a retiree with minimal income, this becomes an important consideration.

The decision not to sell, has an adverse effect not only on the retiree but also on other property consumers who could and would make better use of the retiree's property. This supply blockage distorts construction strategies and puts unnecessary pressure on infrastructure.

REINSW believes the state government has a number of options to elicit a positive response from retirees, which will increase stock, favourably affect affordability and drive construction of high quality, higher density and more efficient dwellings by developers.

I call for the NSW government to provide retirees with a 50 per cent reduction in stamp duty for a residential property purchased to replace an existing residential property up to the value of $1 million. In combination with this strategy there needs to be genuine and compelling incentives for retirees to relocate to regional areas.

A reduction in stamp duty will drive an increase in transactions. The revenue Government loses from the retiree's purchase is more than compensated for, form the revenue earned by the purchase of the retiree's property. This is a sale that would not have occurred but for the incentive.

Meanwhile, encouraging retirees to relocate to regional areas takes pressure off an already strained greater metropolitan infrastructure system.