Property taxes are a “knee-jerk” reaction from government which serve to put the brakes on the property market while filling government coffers, says a real estate industry leader.
John Cunningham, deputy chairman of the Real Estate Institute of NSW says the group is currently looking to commission research into different options for minimising stamp duties, such as a national exemption for over 65s with regards to stamp duty, and what other options exist for raising capital.
“So we're looking at both ends, the first home buyer and the last home seller... You can see the state government coffers have been filled very eagerly in the last few months with the real estate boom that’s happening at the moment, but first home buyers are the ones that are not in the market place, they’re the ones that are being pushed out of the marketplace by investors."
A lack of concessions for first home buyers and overzealous taxation on property have stifled activity in the market, and its high time for reform, says Cunningham.
“State government tend to have a bit of a knee-jerk reaction to stamp duty and they don’t have a consistency across the board with reform, they just tend to go with what’s fashionable or popular at the time to stimulate that section of the market rather than having something consistent.”
While some states have had success with lowering stamp duty, a switch towards land tax is not the answer, says Cunningham.
“Land tax is a heinous tax, the biggest disincentive to property investment imaginable. The answer is to increase GST, but you may as well throw that one out. It’s the consumer tax whereas all the others are investment taxes… it’s a very odd set of circumstances.
“When governments look at raising money they automatically look at the property industry and taxing it more as the answer, the quickest, easiest way.”
By lobbying for real reform in the property industry, there is much to be gained for both consumers and industry professionals, says Cunningham.
“We know there are roadblocks that occur at both ends, and from that point of view it’s worthy of investigation for both brokers and agents. It’s an industry that we share and stimulating more activity means everyone benefits; people move more when they need to rather than when they’re forced to. There are a lot of positive social outcomes from it and a lot of positive financial outcomes for all.”