The 2019/2020 South Australian Budget has been well received by the state's housing industry for its measures to improve housing affordability.

Tuesday's budget included the announcement of a $104.5 million housing stimulus package designed to help first home buyers break into the market.

Of the money allocated to the program, $21.4 million will go to the South Australian Housing Authority to undertake a housing construction program in 2019-20 and 2020-21 to build about 90 new homes, of which the majority will be sold as affordable housing.

At a glance:

• The 2019/20 SA Budget includes a $104.5 million housing stimulus package designed to help first home buyers break into the market.
• There will be a land tax surcharge on certain trusts to provide a level playing field for all taxpayers.
• The Real Estate Institute of South Australia has described the budget as fair.

The housing package also includes $21.1 million for a preventative maintenance and upgrade program in 2019-20 by the South Australian Housing Authority to improve up to 450 ageing Housing SA homes, as well as the creation of a new time-limited interest-free deposit gap loan of up to $10,000 for five years, funded via a new Affordable Housing Fund.

Real Estate Institute of South Australia General Manager Andrew Shields told WILLIAMS MEDIA the measures formed part of a "fair" budget.

"It's obviously a positive because it helps people on to that housing ladder and assists with the great Australian dream of buying a home," he said.

"I think it will have a relatively small impact in regard to the overall housing market, but we support people getting a start in home ownership."

Treasurer Rob Lucas said the Government was delighted to provide a "significant and immediate boost" for the local housing industry which had from a modest softening in the market and several local building companies recently entering receivership.

"This is a deliberate and targeted response to the well-documented challenges faced by the local construction industry and the many South Australians who may be finding it difficult to break into the housing market,’’ he said.

“Notwithstanding a relatively strong pipeline of residential construction work remaining for the short-to-medium term, dwelling approvals have declined by 18 per cent over the past 12 months and the sector is becoming increasingly concerned about the future."

'Giving with one hand and taking with the other'

As part of the budget, Treasurer Rob Lucas announced the introduction of a new ‘aggregation model’ for land tax purposes from July 1, 2020, to ensure a more “level playing field’’ for taxpayers.

Based on similar models in NSW and Victoria, the arrangement will include:

• A shift to aggregating based on an owner’s interest in every piece of land, rather than only aggregating properties held in the same ownership structure;
• Introducing provisions to allow two or more related companies to be grouped for land tax purposes.
• Introducing a surcharge on land owned in trusts in cases where the interests in land of trust beneficiaries are not disclosed or cannot be identified. 

Mr Lucas said the measure was "aimed squarely at closing a loophole that may encourage some land owners to form complex ownership structures designed purely to avoid paying land tax."

In South Australia, land tax is currently paid by only 22 per cent of taxable properties.

Of those, the top 2 per cent of ownerships by value account for 80 per cent of total land tax paid, while the top 10 per cent of ownerships by value account for more than 95 per cent of total land tax revenue (Deloitte Economics 2017).

Property Council of Australia South Australia Executive Director Daniel Gannon said that if South Australia had flat land tax rates, the problem would not need to be addressed.

"Land tax rates have been a significant investor handbrake for many years, and in an effort to fix this situation the Government will actually punish the sector before helping it," he said.

“By addressing this aggregation issue, the Government is further taxing the biggest contributors to state taxation revenue in South Australia, which presents some level of investor risk and will have flow-on implications for tenants and consumers.”

Click here to view the SA Budget papers.

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