REINSW: 'Supply shortage ignored by state budget'
Writing exclusively for Australian Property Investor Magazine, Real Estate Institute of New South Wales Chief Executive Officer, Tim McKibbin, argues that the state's stamp duty and other reforms do not address the central issue of a shortage of housing supply.
The reforms unveiled in last month’s NSW Budget were presented as the catalyst for generational change. On the surface, the choice to pay an ongoing property tax instead of stamp duty appeared to represent a major shift. Dig only a little deeper, and it’s much ado about nothing.
It took many in the industry a moment or two to realise the reforms relate only to a small section of the populace. For existing property owners and investors, the landscape remains the same. The narrow scope of the reforms undermines the potential for change.
The change apparently sought, broadly, is an improvement in affordability. And while some people may indeed be able to buy a first property more easily via the shared equity trial arrangement, a broad improvement won’t happen when the reforms are accessible to so few.
As an industry, our expectations for the stamp duty and shared equity reforms are low. The Budget was another case of missed opportunities.
Specifically, opportunities to address the supply shortage and stamp duty bracket creep went begging.
In New South Wales, the market’s inability to meet already strong demand with sufficient supply is the crux of the affordability problem. Nothing in the proposed reforms addresses the critical shortage of supply.
Lessons from the road
For the past three months, the REINSW Roadshow has visited regional and metropolitan locations across the state. Overwhelmingly, the major concerns people in the industry have at their local level relate to a shortage of housing. It goes both for homes to buy and homes to rent.
We’ve heard first-hand how dire the situation is for many people, particularly in some regional locations. Increased homelessness is a real concern.
The message we have for local governments is, if they haven’t already, to mobilise for the future. Councils are elected representatives with a responsibility to consider the needs and wants of their communities in the short, medium and long terms.
It’s little wonder many downsizers are unwilling to move to a smaller property - the sums just don’t add up.
- Tim McKibbin, REINSW CEO
They need a vision. This vision should capture components such as housing targets and density today, tomorrow, and in the years and decades ahead. It must be clear, openly accessible, and those who set the vision must be accountable for its progress to reality. Then, with clarity, and with more appropriate planning and approval timeframes, the development community can play its role.
Government at all levels has a role to play in increasing the provision of housing supply. In the absence of real action at the federal and state levels, it’s time for councils to recognise the position of leadership they’re in.
Brackets keep on creeping
The budget also missed an opportunity to bring stamp duty brackets up to date for all purchasers.
The numbers highlight the distortion. Over the past 20 years, Sydney’s median house price has increased 280 per cent, from approximately $418,000 to $1.59 million. Over the same period, the stamp duty payable for a median-priced house in Sydney has increased 406 per cent, from $14,300 to $72,400.
It’s little wonder many downsizers are unwilling to move to a smaller property. The sums just don’t add up. Rent money is not dead money but stamp duty is. Rising interest rates and increases in the cost of living contribute to a broader sense of caution.
First-home buyers certainly deserve stamp duty relief but so do other purchasers, including the downsizer cohort. Plus, the larger homes they vacate add to the choices for first-home buyers.
If only there were policies incentivising, not penalising, this course of action. Policies that encompassed everyone, so as to begin to address the broader change needed.