Housing affordability has become the next political battleground in Australia’s most populous state as the state Labor Party offers to cut stamp duty (a one-off tax to the government) for 46,000 first-home buyers.
New home buyers around the country have struggled to keep up with rising property prices over the last decade; and while there was respite during the pandemic, recent interest rate rises have ratcheted up the pressure again.
New South Wales opposition leader Chris Minns said if elected, his Labor government would waive stamp duty—a one-off tax on property transactions—for new and existing homes valued up to $800,000.
The current program waives stamp duty for new homes valued up to $800,000 and existing homes of up to $650,000.
An additional measure will be partly waiving stamp duty for homes worth up to $1 million, up from the current limit of $800,000.
The Parliamentary Budget Office estimates that the expanded scheme will include an additional 46,000 people and cost the New South Wales state budget $733 million over the next four years.
“I want more singles, couples, and families realising this dream. What I will not do is saddle first home buyers with a new, yearly tax bill that increases every year,” said opposition leader Chris Minns.
The move is a response to the current Liberal government’s land tax reform passed in November 2022 that will allow homeowners to choose between paying a one-off stamp duty cost or paying an annual land tax (at a much lower rate) in continuity for properties worth up to $1.5 million.
Stamp duty was deemed a major hurdle for new home buyers trying to enter the market and an unpredictable revenue source for governments.
Housing Affordability Continues to Plague Australians
Housing affordability continues to plague Australia’s capital cities, with Sydney recording a median price of $1.03 million in November 2022.Interstate migration away from Melbourne and Sydney—due to lockdowns and the advent of work-from-home—has also seen affordable properties in Brisbane get snapped up by desperate buyers.
Further, due to global supply chain problems and worker shortages, construction work for new homes has been hamstrung, resulting in major delays.
The report stated that the focus on demand-side policy was politically driven and not a viable long-term approach.
“Indeed, pursuit of such approaches may serve as a form of displacement activity: a distraction from the need to countenance the much more far-reaching reforms needed to fundamentally enhance home-ownership affordability,” the report said.
