State budgets put the squeeze on affordability
Short sighted new property taxes in New South Wales and Queensland will jeopardise housing supply and do nothing to improve housing affordability, says the Property Council of Australia.
New stamp duty and land tax surcharges on foreign investment, outlined in the NSW Budget tabled yesterday by NSW Treasurer Gladys Berejeklian, are projected to raise $835 million and $166 million respectively over four years.
Foreign owners, investors and developers of residential land in NSW will be slugged with a four per cent stamp duty surcharge, effective immediately, and a 0.75 per cent land tax surcharge from 1 January 2017.
The Budget papers reveal that, even before the foreign investor component is considered, stamp duty is projected to grow by an average of 4.7 per cent per annum over the next four years.
Property Council NSW executive director Jane Fitzgerald says there is no justification for imposing a billion dollars’ worth of new taxes on the property sector.
“These new taxes will slow down housing supply and are the latest incarnation of this state’s addiction to inefficient, anti-growth property taxes,” Fitzgerald says.
The NSW Intergenerational Report, released with the Budget papers, notes that the state is facing an accumulated undersupply of 100,000 dwellings as housing approvals have been unable to keep pace with strong population growth.
Fitzgerald says offshore investment currently accounts for up to 20 per cent of pre-sales in Australia’s capital cities.
“More taxes on homes being built will see more costs being passed on to Australians who buy them, making affordability worse,” Fitzgerald says.
Meanwhile, the Palaszczuk Government has imposed a three per cent charge on foreign purchases of houses and apartments.
Chris Mountford, executive director of the Property Council in Queensland, says the tax “not only risks investment and jobs in the construction sector, but also risks driving up the cost of housing for Queenslanders across our cities and our suburbs.”
The Budget forecasts stamp duty to grow by 5.6 per cent and land tax to grow by 7.3 per cent in 2016-17.
Mountford says strong residential development activity – particularly in apartment construction – over the past 18 months has supported the Queensland economy.
“Foreign investment has played such a powerful role in providing funding certainty and the presales required to get projects out of the ground,” he says, adding that in an already cooling market, it “beggars belief” that the government would “risk making it even more difficult for the apartment market by slugging it with an additional stamp duty surcharge.”