Stamp duty reform isn’t the only way to help FHBs
NSW is once again making changes to first home buyer stamp duty. But if the government really wants to help this cohort, it should broaden its focus, one economist argues.
According to Mathew Tiller, head of research and business intelligence at LJ Hooker, alleviating stamp duty for first home buyers is a positive move forward, but the NSW state government should also be providing exemptions to encourage older Australians to downsize.
LJ Hooker is calling for a reciprocal arrangement to provide an impetus for older Australians to make the transition to more suitably sized homes, as a way to bring new stock onto the market for those first home buyers and others.
Mr Tiller noted that the number of properties listed for sale is currently 20 per cent below the five-year average. While some Australians with large homes might have the desire to move into something more suitable to their current lifestyle, many in that group are hesitant to sell due to the high cost of stamp duty on their next purchase.
“The government’s focus on providing relief to first home buyers through stamp duty policies is a demand-side approach, and while this is commendable, what is needed is a reciprocal supply-side policy,” Mr Tiller opined.
“By offering incentives that eliminate stamp duty for downsizing home owners, there is the ability to balance the market and prevent measures that would inadvertently drive higher prices.
“A reciprocal approach ensures fairness and without such a policy, we will continue to see a chronic shortage of stock, so while people may find it easier to get into the market, they will find a very limited choice of property available,” he added.
Beginning on 1 July 2023, first home buyers purchasing a property with a sales price up to $800,000 will pay no stamp duty, which represents a savings of $31,000. There will be a reduced rate of stamp duty for those buying properties between $800,000 and $1 million. First home buyers will need to live in the home for 12 months to receive the exemption.
The real estate group describes this measure as a positive step, but ultimately, LJ Hooker is pushing for stamp duty to be abolished on property transactions altogether.
“This is an outdated tax; the government has the ability to improve affordability and foster a more efficient and equitable real estate sector simply by removing stamp duty from property purchases,” Mr Tiller said.
“It stops people from downsizing and families from upsizing, and as a consequence, keeps people in unsuitable homes for longer. In addition, it also prevents people who may need to sell due to a change in their situation, such as divorce, death and unemployment.”
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