Stamp Duty removal may help Australian property

The New South Wales Property Council has indicated its concerns over the slowing Australian property market by proposing to the State Government that removal of stamp duty from all new homes was the best way to jumpstart the market.
The Sydney Morning Herald reports that the stamp duty proposal, which is based on modelling by the economic forecaster BIS Shrapnel, would cost the Government $279 million a year in lost stamp duty revenue. The Property Council calculates that the actually cost to the state works out to be only $92 million. The Council has taken into consideration the additional activity caused by a revamped housing market.
The Treasurer, Michael Costa, said his department had analysed the Property Council’s proposal and had doubts about its economic assumptions.
“Treasury believes they have overstated the stimulatory effect and understated the cost, and does not believe the proposal would be effective in boosting dwelling construction or improving housing affordability,” Mr Costa said.
Higher interest rates were the biggest impediment to the recovery of the building sector. He also pointed to the Government’s first-home-buyer scheme, which he said was the most generous in the country.
In a separate development Housing in Adelaide experienced its biggest turnover of properties in a January for four years, with 1731 settlements recorded. This figure is up more than 100 on last year. The State Government’s December quarterly figures also peg the Adelaide median price at $290,000.
Real Estate Institute of South Australia president Mark Sanderson said turnover was an important indicator as to how the market was performing. “Having good volumes of property being bought and sold shows people are prepared to make decisions and act on what is happening,” he said.
He described the level of turnover as a “return to those boom years”. “Although we won’t have a return to the price increases that we had in 2003,” Mr Sanderson said. “But these results still show a very important confidence in the market.”
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