A leading real estate group has challenged the NSW treasurer’s claim that the state government is improving housing affordability by focusing on new supply to put downward pressure on prices.
Laing+Simmons says the exorbitant cost of stamp duty in NSW will continue to push property prices up, adding that stamp duty is the most significant barrier to the purchase of property in the state.
The group’s managing director Leanne Pilkington said stamp duty is a short-term revenue booster that has disastrous long-term consequences.
“We are already seeing [them] play out, most noticeably in the affordability crisis we are currently faced with,” Ms Pilkington said.
Stamp duty contributed to a $4 billion surplus for the NSW government and few people believe it will be abolished or significantly reduced.
Ms Pilkington warned that the ‘revenue party’ may soon be over, as moving home becomes increasingly unaffordable for many Australians.
“[Stamp duty] 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,” she said.
According to CoreLogic RP Data, the number of fresh housing stock added to the market has been lower than the past two years, with the shortage of advertised stock most pronounced in Sydney.
Total advertised stock levels are currently 10.2 per cent 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 properties.
“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.
CoreLogic RP Data recently reported that 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.
Ms Pilkington said, regardless of an individual’s financial circumstances, incurring such a cost is unreasonably excessive.
She said while the government has “dined out” on stamp duty in recent years, it has had a pronounced “flow-on impact that is already coming back to bite”.
“This is a tax that must shoulder the majority of the blame for the critical housing affordability issue that the people of NSW face more than those in any other state,” she said.
Ms Pilkington said the NSW government cannot rule out stamp duty reform indefinitely if it is serious about helping Australians, especially young Australians, enter the property market.
“When the Northern Territory and West Australian governments reduced stamp duty, revenues increased as a direct result because of volume increases,” she said.
“I’m convinced that a reduction in or, ideally, the abolition of stamp duty would see an influx of properties come on the market.
“This in turn would place genuine downward pressure on property prices and would have the most meaningful impact on affordability.”
[Related: Stamp duty debate ongoing]