NSW election result promises real estate sector shake-up

Ahead of polling day, the new NSW Labor Government identified the housing crisis and the need to increase supply as one of the state’s most pressing matters.

It also indicated a willingness to engage with all stakeholders to address the crisis.

In the lead-up to the election, the new Chris Minns Government announced various proposals and ideas to which the REINSW would welcome the opportunity to contribute and to offer a real-world perspective.

Tax reform is an obvious one.

Labor announced it plans to eliminate stamp duty for first home buyers purchasing a property valued up to $800,000, while offering a concession for those purchasing a first home for between $800,000 and $1 million. It will also repeal the property tax.

The REINSW wants to see broad-based tax reform with everything on the table. Stamp duty is a huge impost on first home buyers and a disincentive for owners to sell and buy another property.

REINSW would like to see Treasury model the impacts of a reduction in the rate of stamp duty on the number of transactions. This could very well be revenue neutral for Government. 

Tax should be a consequence of a transaction, not a consideration. But stamp duty makes people think twice before selling and moving to a home better suited to their needs.

It’s reflected in the numbers. In 2009, the hold time for houses was nine years; now it exceeds 13 years. For units it was 7.7 years; now it exceeds 11 years.

The cost of new property coming to market is inflated by 40 per cent because of Government taxes and charges levied across all three levels of Government. Property is burdened by a disproportionate amount of tax and, consequently, consumers are suffering. We need a sensible discussion with it all on the table.

But only through increasing supply will the housing crisis ever end.

Initiatives needed to tackle housing supply crisis

On this score, the Government’s plan to undertake a new pilot build-to-rent project on the state’s south coast, with 30 per cent allocated to social and affordable housing, shows a willingness to tackle the supply crisis in new ways.

Likewise, the potential establishment of the Homes NSW agency, which would be charged with the responsibility to deliver more housing options and better manage social housing. Such ideas are a good start.

Industry is also hopeful the proposal to increase the decision-making power of the Minister for Planning will expedite the approval process that at present is unsustainably slow.

One of the most troubling parts of the housing crisis is the dire situation for renters and the counterproductive targeting of property investors.

On this score, there’s considerable work to be done. We’ve seen policies such as banning no grounds evictions and threats to introduce rent caps have the opposite effect than what was intended.

Investors are exiting the market in droves in favour of alternate investment classes that enable the protection of their assets and deliver the returns they need.

An independent property services commissioner – one which does not operate under the remit of the existing regulator – is needed to provide this $20 billion a year tax-generating industry with the support it needs, and which consumers deserve.

A respectful and cooperative relationship between Government and industry is essential for a coordinated response to address the housing crisis.

Now it’s time to get to work and industry stands ready in support.