Developer GST should go: Bouris
By
Ben Abbott
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3/09/2010 5:30:00 AM
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3
comments
Mark Bouris, chairman of financial services group Yellow Brick Road, has called for a GST exemption for developers on home sales, to help first homebuyers to crack the housing market.
Bouris, who launched a first homebuyer product earlier this week, said by cutting GST out of the sale price, developers could sell properties 10% cheaper, negating any need for housing grants.
"I'm sure a borrower would rather forget the grant, and decrease the purchase price," Bouris said.
While not passing on GST, developers build the tax into their price. This means that for a home worth $250,000, the tax effectively being paid (at 10%) would be $25,000.
"They are taking from the developer the $25,000 and giving it back to you as a first homebuyer or even a lesser amount, so they are actually making a profit," Bouris said.
The grant only succeeds in pushing prices up, with the market factoring in price rises within a two-three month period after changes to grants, as all participants are competing on the same basis.
"If you want to make property more affordable, you've got to reduce the price, and the way you reduce the price is take it out of the costs of the developer. The developer has always got to meet the market, so you know he'll drop his price."
However, Bouris admits that governments are unlikely to make any such change, as it’s “just too big a deal”.
The former founder of Wizard Home Loans also recently called for the federal government to introduce a Seventies-style homeowners' rebate of $1,500.
Latest Comments
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comment(s)
sidney broker on
03 Sep 2010 10:30 AM
Very good news for the develeper. What an easy way to increase the profit margine.
Michael Heckendorf on
03 Sep 2010 10:48 AM
Mr Bouris, the marketer,has been making some crazy statements about homebuyer affordability, lately. ie reintroduce tax deductibility for personal mortgage payments (there never was), genuine savings are not important, and now he simplistically says that doing away with developer GST will reduce prices by 10%.
Surely demand has something to do with price rises and affordability.
Marty on
15 Sep 2010 09:41 AM
Quite a simplistic view that removing the GST on the sale would decrease the price by 10%. Do we take it from that he woudl like the developer to still be entitled to claim bach the GST on all the materials used in the construction of the property and on all the sucontractor fees they pay. The net GST the developer currently pays is NOT 10% of the sale price as they get credit for all the inputs. And yes as already said cutting someones taxes or costs does not guarantee the sales price will fall. Maybe we should limit people to buying 2 properties at least that will help the demand/supply proplem (I forgot for a moment that we are not a communist country)