While the NSW government has flagged an overhaul of the state’s planning system to tackle the housing shortage, one solution has been unfortunately overlooked: the removal of stamp duty.
Managing director of Laing+Simmons and president-elect of the Real Estate Institute of NSW (REINSW) said that if the government was serious about tackling housing affordability, it should start by considering how to reduce or get rid of stamp duty.
“The fact is that the huge cost of stamp duty in NSW is the biggest barrier to the purchase of real estate. It stifles transaction activity, puts increased pressure on prices and encourages people not to move, fuelling the supply shortage,” she said.
“For many people, stamp duty makes it impossible for them to afford to move. But the impacts of this tax – for which consumers receive no service in return – run much deeper down the supply chain.”
Until the government addressed this key barrier, it could not justifiably claim that it was supporting first home buyers, Pilkington said.
By eliminating stamp duty, NSW would see an “influx of properties come to market,” she added. This would put a downward pressure on prices and significantly improve affordability.
Previously, the NSW government has ruled out stamp duty reform, saying it depends too heavily on revenue garnered from the tax. However, Pilkington pointed to Western Australia and the Northern Territory which had brought in more revenue through the increased transaction volumes resulting from reduced stamp duty.
The consequences of this lack of action were now coming back to haunt the NSW government, she said.
“The government is expecting reduced surpluses in years to come. Action on stamp duty has the potential to reverse the trend, open up new supply and improve affordability.”
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