The NSW Government is misguided in its view that a reduction in stamp duty rates would fuel the affordability crisis that is currently being faced in Sydney, according to the Real Estate Institute of New South Wales. NSW Premier Mike Baird told ABC News on Saturday “reducing stamp duty at this time will add to the affordability crisis… by giving a stimulus to an already heated market”. The comments are misguided and I urged the Premier to rethink the government’s approach.
Abolishing stamp duty for first home buyers on existing properties and reviewing stamp duty rates that have not been touched for 30 years would see more properties enter the market. Lower volumes drive higher property prices, while higher volumes slow the market and improve affordability. The NSW government, which has seen a windfall of $5.18 billion* in stamp duty from residential transactions this financial year, will see even more revenue by reducing stamp duty rates.
When the Northern Territory cut stamp duty by 0.45 per cent between 2006/07 and 2008/09 revenues from the tax increase by more than $22 million (see NT Table). In Western Australia revenues rose by more than 709 million between 2003 and 2006 when stamp duty was cut by 0.9 per cent (see WA table).
In 2006/07 when the vendor duty was repealed in NSW the government made almost $1 billion more in revenue and this proves that a reduction in tax improves the market for both the property consumer and government. Now is the time to give back to first home buyers and make selling more attractive to older Australians who are sitting on the family home because of stamp duty bracket creep. Increasing stock levels will make a significant difference to the Sydney housing market.
“Giving first home buyers the opportunity to add value to existing properties is good for everybody because it helps to revitalise communities.
“The message for the state budget on 23 June is clear. Stamp duty reform is necessary and a win fall for all of New South Wales,” Mr Gunning said.