The NSW government’s recently announced stamp duty concessions are reverse-engineering supply and demand, according to Douglas Driscoll, CEO of the real estate group Starr Partners.
Driscoll called for more justification around the NSW government’s solution for housing affordability after it revealed that no concessions would be afforded to buyers making property purchases over $800,000.
The measures, which were taken to cabinet last week, proposed for stamp duty to be abolished on all homes valued up to $650,000, and relief for buyers of homes valued up to $800,000.
Driscoll said his offices are already experiencing vendors around the $650,000 and $800,000 price points asking agents to list their homes for slightly more, since first-home buyers will soon have more to spend.
“When first-home buyer grants were introduced a few years ago, as a group, we saw the same thing. The market needs to find its natural level, as otherwise these measures could prove counter-productive and possibly even lead to an artificial increase in prices,” he said.
While the new measures appear to be a step in the right direction, Driscoll wants performance to be critiqued. “It is a complex matter, as the state government needs to protect the cash cow that is stamp duty, but also make an attempt at solving the affordability crisis. If the intention is to alleviate affordability woes amongst first-home buyers, how did it reach the figure of $650,000? This tells me the measure was designed to drive more first-home buyers into apartments. With far fewer investors as a result of the macro-prudential measures and tens of thousands of new apartments in the pipeline, who is going to buy them otherwise?” he said.
According to CoreLogic, Sydney’s median dwelling price is $872,300, which is two-thirds the figure proposed for abolishing stamp duty. Only 20% of Sydney Metro dwellings sold at a price of $650,000 or less over the past 12 months were houses. This increases to 34.4% when looking at dwellings that sold for a price of $800,000 or less.
In 2016, the apartment development boom in Sydney raised concerns about oversupply. Driscoll believes the stamp duty changes are designed to drive more first-home buyers into apartment purchases.
“First-home buyers currently represent about four to five per cent of the market. We need to get this to double digits and this measure might not do that. When you really look at it against the market, less than 10 per cent of Sydney’s suburbs would have homes with a median price below $650,000. If the government was serious about alleviating barriers, it would completely abolish stamp duty for first-home buyers or at the very least make the first $650,000 exempt, irrespective of the purchase price, and not cap it at a price that forces people into apartments to reverse engineer the cycle.” he said.
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