I don’t think I’m alone in saying that I was quite baffled by the Queensland Government’s decision yesterday to effectively double stamp duty for non-first homebuyers by scrapping the stamp duty home concession in the State Budget.
BY VANESSA DE GROOT
In fact, judging by the comments from the public on the few news stories I’ve read today on various websites I’d say it’s just about sealed Premier Anna Bligh’s fate of being ousted at the next election.
The State Government announced yesterday that from August 1 the transfer duty payable for people who buy a new principal place of residence will be the same as that paid for investment properties, so the substantial stamp duty discount that’s been in place on homes will be no longer.
Brisbanetimes.com.au reported yesterday that at the moment, if a purchaser bought an investment property worth $500,000 they would pay $15,925 transfer duty but for a principal place of residence the stamp duty would be only $8750.
But after August 1 the stamp duty for both would be the same, so it will cost a homeowner around $7000 more to buy a principal place of residence than it does now.
The property market around Australia is generally flat and in particular, the Queensland residential market has been widely reported as being one of the slowest. So why on earth would the government make transacting property more expensive? Surely it realises this will only cause the market to slow further and potentially slow impending price growth.
Already there’s a lot of stock on the market that isn’t moving and this will likely make people less reluctant to sell their homes and buy another home.
What the government really should be doing is introducing measures to stimulate the industry – to inject confidence and get people to start buying again.
Of course this is where the State Government’s $10,000 grant for people buying new homes comes in. The payment will be available only between August this year and January next year for people who sign home-building contracts for properties worth up to $600,000.
The question is – will this grant simply cause the price of newly built homes to go up by $10,000?
In exchange for significantly upping stamp duty in Queensland – by up to around $7000 on some purchases – the government has also dropped the state’s $110-a-year ambulance levy in what’s been described as a bid to ease power bill pain.
Brisbanetimes.com.au reported that the changes to stamp duty are predicted to raise an extra $161 million for the State Government in the coming financial year and $247 million the following year.
But I’m quite confused about these figures – how does the government think more money will be raised when quite possibly the increase in stamp duty will potentially cause a fall in property transactions? If homeowners decide not to move home because the cost of buying is that much more then it’ s likely to actually cau
se the revenue from stamp duty to the State Government to fall.
The reality is that $7000 is a lot of money for many people and while not everyone will be paying that much extra in stamp duty, many will. It’s enough of a deterrent to prevent people from selling to upgrade and buy something else and instead perhaps choose to renovate their own home instead.
There have been calls for years now for governments to completely scrap stamp duty around Australia and one of the baffling things about the Queensland Government’s decision to get rid of its stamp duty discount is that just months ago Treasurer Andrew Fraser called stamp duty an inefficient ‘relic’ that should be scrapped.
It’s true that even with the doubling of stamp duty Queensland still has the lowest duty of the mainland states in Australia, but the fact is that in the current property market, what’s needed is an incentive for people to buy; the increase in costs is clearly a disincentive.
What’s likely to happen now is that people will – if they can – scurry to buy a property within the next six weeks, before the stamp duty concession is scrapped. That may have the effect of pushing the Queensland property market up during that time, but unfortunately after that it’s likely to slow again.
The Real Estate Institute of Queensland (REIQ) yesterday said the removal of the stamp duty home concession would “flatten the struggling Queensland residential property market”.
“The government is obviously trying to fill the financial void that has been left by the weak property market and the subsequent lower stamp duty receipts given the marked reduction in property sales over the past 18 months,” said REIQ chairperson Pamela Bennett.
“A better way to stimulate the economy would have been to provide financial incentives for all buyers of all types of properties which in turn would have increased activity and therefore helped the government’s bottom line.”
Tell us what you think. What impact will the increase in stamp duty have on Queensland’s market? Do you think stamp duty should be abolished around Australia – why or why not?
Vanessa De Groot is the deputy editor of Australian Property Investor magazine, www.apimagazine.com.au