House prices may have hit bottom
Australia’s house prices fell in every quarter last year but they may have hit bottom, new figures show.
Housing data released by RP Data-Rismark today shows that the rate of decline in house prices across the nation slowed towards the end of last year.
“The December quarter was the year’s smallest quarterly decline,” RP Data research director Tim Lawless said.
Capital city house values fell nationally, in seasonally adjusted terms, in the last three months of 2011 by 0.5 per cent, RP Data-Rismark’s figures show.
That followed a larger decline in the previous June and September quarters of 0.8 per cent and a substantial national drop of 1.5 per cent in the March quarter for 2011.
Last week, rival data provider Australian Property Monitors released figures for the same period which showed national house prices stayed largely the same for the December quarter.
The figures suggest the rate of decline in house prices is tailing off.
Sydney’s house prices, the country’s most resilient because of a shortage of housing and state government first home buyer incentives, rose in the December quarter by 0.7 on seasonally adjusted terms, RP Data-Rismark’s figures show.
According to RP Data, Melbourne’s prices fell 0.5 per cent in the December quarter, contradicting figures from APM and the Real Estate Institute of Victoria which show house prices rose by 1.1 and 1.9 per cent respectively in the same period.
The housing market in all other Australian capitals apart from Sydney continued to soften in the last few months of 2011, RP Data said.
Perth values fell 2.1 per cent, Melbourne’s 1.4, Brisbane’s 1.3, Adelaide’s 1.2, Darwin’s 1.1, Hobart’s 1 per cent and Canberra by 0.1 in the December quarter, RP Data said.
Revised figures show November was better than previously reported, with growth of 0.5 per cent seasonally adjusted, the figures show.
“One of the things we’re expecting to see following the interest rates cuts last November is more activity,” Rismark managing director Ben Skilbeck said.
“We expect transaction volumes to pick up in February and March,” he said. “We would expect the negative growth to abate.”
Written by Simon Johanson, Sydney Morning Herald, 31 January 2012
State by state guide to 2012 house prices
CALLING the residential property market for this year is a simple matter: things are going to get better, unless they get worse, and some parts of it will just go sideways.
Industry specialists are quick to allude to economic uncertainty stemming from Europe, but are also fairly quick to abandon commentary on that and concentrate on the strengths they see in the domestic market. And most, having delivered the European caveat, are surprisingly confident of a strong and robust year and are quick to name places that show the most promise.
“The best bets for 2012 are Perth followed by Brisbane. Sydney is solid as a rock. But don’t expect much in Melbourne ’til the third or fourth quarter,” says Andrew Wilson, senior economist at research house Australian Property Monitors.
“Canberra is a good prospect: there’s always a shortage of housing,” he says.
Jason Anderson, senior economist at property research and forecasting house Macroplan, says: “Sydney and Perth are the two that will outperform in 2012 and, for Sydney, it will be the first time in years.”
Anderson says Perth’s rental market is getting tougher and with interest rates coming down, more people will seek to buy. “The equation looks quite good. A 5 per cent price growth this year is a reasonable expectation.”
“And,” he says, “we’re very optimistic about the Hunter Valley in NSW.” Unemployment is at 4 per cent, there is a very strong construction cycle starting in upper Hunter mines and in road, rail and ports. Housing shortages there are as bad as in Sydney, he says, so the Hunter is suffering Sydneyesque rental pressures. “Strong wages growth will attract people and tighten that pressure. We expect price rises of 7-8 per cent this year. The Hunter is on the cusp of a breakout. It is the standout area in NSW,” Anderson says.
L. Janusz Hooker, chief executive of LJ Hooker real estate group, says Newcastle, the Hunter hub, is a main beneficiary and, while still affordable, is under strong knock-on pressure from the Hunter’s mining boom.
What is very clear is that the closer experts are to a particular market, the more sanguine they are about it.
Wilson says Hobart and Adelaide will “move sideways for most of the year” with a slight chance of some movement in Adelaide by the end of of the calendar year, and Macroplan’s Anderson believes Adelaide is “in for a bit of a rough time for the next 12 to 18 months. There’s no point beating about the bush: it will have trouble. If Adelaide can keep house prices flat, that would be a good outcome.”
But the South Australian Property Council’s chief executive, Nathan Paine, says Adelaide is “looking pretty solid”. Housing starts are holding their long-term average and he sees the possibility of more strength with new buyers entering the market.
The Canberra-based Real Estate Institute of Australia couldn’t be more forceful in its position. “Well, despite what you’ve heard, there is no housing bubble so don’t expect to see the housing market crash this year or next year,” says REIA chief executive Amanda Lynch. “Property is a sound investment, particularly in Canberra because, despite small hurdles along the way, the ACT has higher wages than the rest of the country and a low unemployment rate,”
Wilson believes Darwin will resume its usual growth pattern and strengthen. “I wouldn’t be surprised to see double-digit growth in house prices there,” he says.
“As for Perth, it’s a no-brainer. Its housing market is still 10 per cent below where it was four years ago, so there are good bargains there but it will soon catch up to its old level. There’s $100m in infrastructure projects in the pipeline for this year; there’s corporate growth and a significant influx of labourers looking for gold, all of which is putting pressure on housing. I expect double-digit price growth in Perth by the end of the year.”
Not everyone is confident about Brisbane. Brian White, chairman of the Ray White real estate group, describes Brisbane as “subdued” and Hooker says “it’s not taking off by any means but after the big price falls there, we might at last be seeing a floor”.
Those lower prices, Hooker says, mean “there are some great bargains to be had as there are also on the Gold Coast and, to a lesser extent, the Sunshine Coast”.
Kevin Seymour, executive chairman of the Seymour Group, a Queensland development and investment company, believes the overall Queensland market will be sluggish except in mining boom towns such as Mackay, Rockhampton, Townsville and Gladstone, where he expects to see strong price growth.
UBS’s head of property analysis, John Freedman, thinks Brisbane’s outlook is constrained and that at best we will see a “mean reversion rather than a recovery”.
What all seem to agree on is Victoria.
“Melbourne? Oh dear,” says Macroplan’s Anderson. “More interest rate cuts would help but, if we don’t get them, I can see Melbourne’s house prices falling a further 5 per cent.”
Harley Dale, chief economist of the Housing Industry of Australia, believes there will be bigger declines in Melbourne than anywhere else and, according to RP Data’s senior research analyst Cameron Kusher, even rental yields in Melbourne are low.
Wilson, however, says houses around Macedon and Wood End northwest of Melbourne offer good buying now.
For JPMorgan economist Ben Jarman, a characteristic of the Australian market is poor housing starts. These fell 6.8 per cent in the September quarter last year, “the fourth significant decline in five quarters”, and he predicts more weakness to come.
This weakness in housing starts has little to do with confidence or the economy: it is largely the result of planning and regulatory complexities and costs.
According to the HIA’s Dale, “more than 40 per cent of the final cost of a new house is taxation”.
Bob Rose, chief executive of the family-run development company The Rose Group, says the situation is critical. “The NSW requirement is for 25,000 new dwellings to be built each year but we’re only building 13,000. Approvals in September per 10,000 people were 47 in NSW, 109 in Victoria and 73 in Queensland. This is crook for NSW. In new growth centres in Sydney’s west, government and council levies on each house/land package are more than $100,000, and that’s without extra huge costs if special reports are required.
“The system desperately needs review. Big listed developers might survive but I can’t see the small ones making it. And if the development industry closes down, who will build the houses?”
To sum up, with the economy comparatively solid, rates falling and housing stock in short supply, the likelihood is that prices will continue to hold or, more likely, rise.
Source : Jo Studdert of the Australian Newspaper. 14 January 2012
Market update – January 2012
Market update – January 2012
Now that 2012 is upon us, it’s time to reflect on the year that has been and starting thinking forward in to the new year. Overall 2011 was generally a good one for buyers of Sydney residential real estate and not necessarily a bad one for sellers, especially those upgrading to larger homes.
According to the latest available quarterly statistics by Australian Property Monitors (APM)), overall Sydney median house prices fell by 1.6% for the year to September 2011, whilst unit prices recorded modest growth of 0.6% over the same period. For the September quarter however, both houses and units recorded falls, of 1.8% and 0.4% respectively. These figures reflect an overall flat market.
Auction clearance rates hovered around 50-60% throughout most of 2011. Interestingly though, most agents in our main areas of operations (North Shore, Eastern Suburbs, Inner West and Northern Beaches) report that taking into consideration post auction negotiations, the results would have been closer to a 75% success rate a week later.
For these above areas that we mostly operate in, our experience of the performance of the residential property market depended on the price level. Our observations are generally as follows:
Lower end of the market. ($400K to $800K). This market segment experienced strong demand from first home buyers taking advantage of the expiring stamp duty concessions for existing properties, and from investors attracted toincreasing rental returns (and more recently reduced borrowing costs). Overall the market performance was reasonably strong.
Mid market ($800K to $1.5M). Quality properties in this market segment experienced good demand (those in desirable locations, in popular streets and in good condition). Less desirable properties in poor positions withdifficult floor plans or building issues, struggled however, with weaker demand from buyers.
Mid/Upper market ($1.5M to $2.5M). Demand from buyers was generally weak, with prices falling 5-10% in some areas.
Premium market (above $2.5M). The weakest market sector, experiencing the greatest buyer caution. Price falls, some significant were evident.
Several factors influenced the buyer wariness and the softening of prices experienced over 2011. Concerns over the international economy, massive stock market fluctuations, debate over the impact on household finances of the introduction of the carbon tax, and poorer employment figures have all had an impact. The high $A has also largely kept expats out of the market.
So what is in store for 2012?
Assuming the international economic situation continues to stabilise and European country debt issues are resolved, the signs for the Sydney property market are generally positive.
Significantly the Reserve Bank of Australia (RBA) decided to decrease the official cash interest rate by 25 basis points in November and then 25 basis points in December to 4.25%. These were the first interest rate decreases since April 2009, and many economists are expecting further decreases in the short to medium term.
This gave home buyers new confidence at the end of 2011, and is expected to continue over the coming year.
The situation for property investors improved over 2011. To the end of September year in year, Sydney house rents increased by 3.1% and unit prices 4.5%, whilst vacancy rates remain very tight. Investors are seeing more favourable rental returns as a result, and with current international economic uncertainty, we are experiencing the return of investors to the safety of “bricks and mortar”.
We think Sydney is now offering some of the best property buying conditions for quite some time, particularly in the mid to upper market segments.
Some factors contributing to a positive outlook for Sydney property in 2012 are :
- Unemployment remains relatively very low – 5.3% in November 2011 according to the Australian Bureau of Statistics (ABS)
- Interest rates are relatively low in historical terms, and with recent decreases by the RBA the outlook by most economists for interest rates is downwards
- Immigration is still very high to Sydney, and the population increases continue to exceed the amount of new development, putting further pressure of existing housing
- Australia’s economic growth rate was 2.5% for the year to September 2011 according to the ABS, which exceeds most OECD countries, and with continued growth expected
Please contact us for a discussion on how you can take advantage of the current buying opportunities in the Sydney market, or for specific advice on what is achievable with your budget in the various suburbs across Sydney.
Written by Henry Wilkinson of Homesearch Solutions. January 2012
Sydney & Perth house prices to rise by 20 per cent
RESIDENTIAL real estate has created more millionaires in Australia than any other form of investment but there may be bigger money to be made over the next decade.
Residential property has eclipsed shares as Australia’s highest-returning asset class over the past 24 years, but over the next decade it will be outperformed by commercial property, according to research by ANZ.
ANZ forecasts that equities will become the strongest performer over the next 10 years, but suggests that when risk is factored in commercial property will also generate similar returns.
Commercial property covers a range of options from office and retail space through to car parks and industrial properties like warehouses and factories.
The report, Asset returns: Past, Present and Future, said owner-occupied housing had made annual average returns of 12 per cent over the 24 years since 1987 even when costs and taxes were factored in.
Simple historical comparisons of equities and property are often used by property analysts to demonstrate housing’s superior capital returns but ANZ included costs, taxes, interest on loans and factored in the risk associated with investing, the SMH reports.
It found that owner-occupied housing had the highest returns in part because of capital gains tax exemptions. Investor housing was the next best asset class, performing slightly better than equities over the time analysed, the report said. They were followed by government bonds, term deposits and commercial property.
But the bank’s analysis of future asset-class returns suggested equities would be the strongest performer over the next 10 years.
Commercial property also shows strong returns, sitting between equities and owner-occupied housing,” the report said. Risk-adjusted forecasts show that equities and commercial property will have similar returns.
However, considering the housing shortage, it is likely there will be many Australians who will make their fortunes out of residential property within the next decade. New data points to house prices rising by up to 20 per cent in some capital cities within the next two years.
Economists are predicting a double-edge sword for Sydney’s property market, forecasting the median price to boom from $644,000 to $770,000 in the next three years – on the back of the housing crisis.
The report, prepared by BIS Shrapnel, says the underlying strength of the Australian economy, stable interest rates in the short term, high immigration and a dire shortage of houses in Sydney, will be the main drivers of this growth. It forecasts the Sydney median house will lift by 19 per cent to $770,000 over the three years to June 2014.
The rise in home prices and shortage of accommodation is also expected to force up rents. This compares with 20 per cent in Perth, 16 per cent in Brisbane, 8 per cent in Canberra and only 6 per cent in Melbourne. It also predicts that first home buyers will start to re-enter the market in greater numbers next year as the outlook for the economy improves. This will in turn encourage others to return, especially upgraders, as demand for their properties improves.
”Sydney hasn’t fallen in a hole and house price growth has been minimal but has held up over the last 12 months,” said Robert Mellor, the managing director of BIS Shrapnel.
But he predicts this will jump to about 5 per cent in 2011-12 and 7 per cent the year after, before growth will start to slow as a result of higher interest rates in 2013.
”At some point in the next few years rising interest rates will become a concern and that will bring a slowing in residential property markets,” Mr Mellor said.
BIS Shrapnel chief economist Frank Gelber warned the Melbourne market was “running out of steam” as supply levels for new homes increased to satisfy demand.
Would-be house buyers would be deterred by a likely 100-basis point increase in interest rates over the next few years. Such a rise would take the official rate to 5.75 per cent.
“The property market will stay stronger over the next few years but there will be no huge increase in (residential) property prices over the next five years in Melbourne,” Mr Gelber said, speaking in Melbourne.
“The next big increase in Melbourne property prices won’t be until the next upward phase of the economy.”
Separately yesterday, the number of home loans approved in August rose 1.2 per cent to 50,965 from an upwardly revised 50,363 in July, official figures show.
Economists’ forecasts had centred on a one per cent rise in housing finance commitments for the month.
The Australian Bureau of Statistics (ABS) said total housing finance by value rose 1.0 per cent in August, seasonally adjusted, to $20.848 billion.
Source : Money Matters. News.com.au, 12 October 2010
Dollar to slip below parity ‘within days’
Online shoppers and overseas travellers are watching with dismay as the Aussie dollar slides back towards parity with the greenback amid predictions that the local unit will sink below $US1 within days – and stay there.
Since climbing almost to $US1.11 in late July, the dollar has weakened as the European debt crisis rattled global markets and the Reserve Bank of Australia has softened its tone on the need to push interest rates higher.
The Aussie dollar caught the latest down-draught earlier today, dropping its lowest level in more than five weeks when US ratings agency surprised investors by cutting its debt rating for Italy. That announcement saw the dollar dip to as low as $1.014 before bouncing higher.
Part of the currency’s recovery was courtesy of the RBA. The release of the minutes from its September meeting – when it left its key cash rate on hold for a ninth straight meeting - were interpreted by traders to mean a rate cut is not imminent.
That view pushed the dollar back above the $US1.02 mark, but Westpac chief currency strategist Robert Rennie said the rebound may be temporary with little news on the horizon that would keep the dollar from slipping back to parity.
“Europe is heading towards a recession; [the] US economy is heading towards a double-dip recession and Asia is slowing. That makes the Australian dollar less attractive,” said Mr Rennie. “We will continue this slide back towards parity.”
A drop in the dollar, of course, will be cheered on by companies trying to export, including those dependent on foreign tourists or students. Still, the relatively strong Australian dollar has helped keep a lid on inflation through cheaper imports – without which, the RBA may well have lifted official interest rates even higher than they are now.
And of course, market analysts change their view on the outlook for the dollar and other assets almost by the minute. Just a couple of months ago, some commentators were tipping the dollar would go to as high as $US1.20 as the US deliberately drives down the value of its currency in a bid to help spark faster growth.
Mr Rennie, though, thinks the Aussie dollar is pointed very much in the other direction, and may drop as low as 95-97 US cents by June next year if not sooner.
“As we move into October, November and December we’re going to see the low moving to the 95 US cent level with $US1.01 to $US1.02 upper end of the very volatile swings we’re seeing at the moment.”
One of the biggest drags on the dollar has been the diminishing chance of an interest rate rise. Speculation is swirling that the Reserve Bank will cut rates to spur a slowing economy in which confidence – both for businesses and consumers – is fragile.
The market gives a rate cut a 60 per cent chance when the RBA meets next month, down from 90 per cent just before the release of the RBA minutes.
More to the point, though, investors remain certain that the cash rate will be well below the current 4.75 per cent level in a year’s time, pricing in the equivalent of six rate cuts by then to 3.25 per cent, according to Credit Suisse data. So long as the market’s take such a dim view on rates, the Australian dollar will struggle to regain its earlier appeal.
Source : Chris Zappone, The Age Newspaper, 20 September 2011
NSW Stamp duty date causes a stampede in auction clearance rates $140.5 million worth of properties moved
THE state government’s move to force first home buyers to pay stamp duty has sent auction clearance rates soaring – moving $140.5 million of Sydney property in one day after months in the doldrums.
The first auction weekend after the NSW Treasurer’s announcement that first home buyers would cop stamp duty on existing homes after January 1 has caused a rush of buyers to get in quick. Sydney auction clearance rates leapt to 60 per cent at the weekend after remaining below 50 per cent for the past eight weeks.
Australian Property Monitors senior economist Dr Andrew Wilson said the stamp duty revelations and 10 months of stable interest rate policy as well as the beginning of spring had given Sydney its highest auction clearance rate in two months.
“With their concessions ending, those first home buyers looking for established units or houses may feel like now is the time,” Dr Wilson said.
“That concession can be up to $18,000 and they will lose that at the end of this year – that is an inducement to have a look at what is around at the moment.”
Dr Wilson said prices would rise at the affordable end of the market if first home buyers did rush into the market.
Listings are also on the rise with a bumper weekend at the end of September and sellers buoyed with new confidence as buyers emerge. “We do have reasonably high levels of stock at the moment,” Dr Wilson said.
“Buyers have been sitting on the sidelines over winter and it has been a quiet market over the year. Sellers have waited for a bit more competition for their properties.”
Real Estate Institute of NSW president Wayne Stewart said agents were expecting a new generation of property hunters who are keen to escape being slogged an extra $17,990 in stamp duty.
“We feel there is going to be a lot of first home buyers getting out there,” he said. “We have a positive and a stable 12 months ahead. We will see a rush on properties in the lower quartile, prices will inflate and we’ll see a hangover period after that.”
Ray White Concord principal Joel Hollis said he had seen a boost in inquiries for homes priced between $300,000 and $500,000.
“The stamp duty will be a hit of $15,000 – that’s a lot of money for anyone these days,” he said. “People who haven’t bought or can’t buy by this time have no choice to go back on the rental market. People that don’t buy before January will see rent increase.”
Richard Matthews Real Estate director Matthew Everingham said strong sales results in Sydney had convinced vendors the market would hold its ground.
“I think there is also now an element of sellers thinking about the effect the reduced stamp duty rates may have early next year,” he said.
Source : Vikki Campion, The Daily Telegraph, 12 September 2011
Rates unlikely to change while global uncertainty remains: RBA’s Glenn Stevens
The Reserve Bank is unlikely to change interest rates while anxiety and uncertainty remains in global financial markets, RBA governor Glenn Stevens has suggested.
Stevens expects that global anxieties are not only having an impact on consumer spending behaviour but could help ease current inflationary pressures.
In a speech made today in Perth titled “Still Interesting Times”, he also stressed that people should not jump to conclusions about the current sovereign debt issues in Europe being comparable with the 2008 GFC.
Stevens says during periods of “sudden increases in anxiety within international financial markets are moments when, if at all possible, it is good to be in a position to be able to maintain steady settings”.
“In the recent few meetings, the board has judged it prudent to sit still, even though we saw data on prices that were, on their face, concerning. To be in that position of course requires timely decisions to have been made in earlier periods.”
Looking ahead at future cash rate decision, Stevens says the task for the board would be to assess what bearing recent information and international and local events will have on the medium-term outlook for demand and inflation.
Stevens says the current environment presents “no shortage of challenges” though he stresses that it should not be assumed that it is necessarily the GFC crisis of 2008 all over again.
“It is reasonable to conclude, at this point, that the outlook for global growth is not as strong as it looked three months ago. Forecasters are generally revising down global growth estimates for 2011 and 2012, mainly as a result of weaker outcomes for the major countries,” he says.
Inflation remains a concern, with Stevens highlighting that while growth seems to be weaker than expected at the end of last year, underlying inflation seems to be higher.
“A key question is whether that is just the vagaries of statistical noise and lags, or whether it is telling us that the combinations of growth and inflation available to us in the short term are less attractive than they seemed a few years ago. If the latter, the spotlight will come back on to supply-side issues.”
Stevens addresses the question of its inflation targets, which have guided the bank in the past on adjusting inflation rates in less globally volatile times.
“Sometimes people ask whether a higher target for inflation might not be better, particularly when inflation is looking like it will rise and the bank is running a setting of monetary policy designed to resist that.
“The answer ultimately hinges on how prepared we would be to accept the things that would go with higher inflation. Higher average interest rates would be among them – there is no reason that savers, any more than wage earners, would be prepared simply to accept an erosion of their financial position.”
Furthermore, he says whatever structural challenges the economy faces will still have to be faced at higher inflation rates.
“Higher inflation wouldn’t make those issues go away, nor make them any easier to cope with (as we know from our own history when inflation was high and structural change still had to occur). We would simply waste more real resources as everyone sought to protect themselves from the higher inflation.”
Stevens points out that credit growth has slowed a bit further and asset prices have tended to decline.
“These factors, along with ongoing evidence that underlying inflation had turned up, were incorporated in the bank’s outlook as published early last month,” he says.
Explaining the 2% to 3% inflation target setting, Stevens says the bank has “a fair bit of history now” dating back to the early 1990s and he acknowledges the work of former RBA governor Ian Macfarlane in determining the current monetary policy framework.
“We arrived at this framework after a long search – the ‘search for stability’ set out in detail by Ian Macfarlane in his ABC Boyer Lectures in 2006,” Stevens says.
At a time when statements made by the RBA are being heavily scrutinised (theAustralian Financial Review runs line-by-line analysis in its editions), Stevens acknowledges this scrutiny and details the research the bank puts into place in putting its monetary policy framework into place.
“The bank carries out a great deal of detailed statistical work, tracking several thousand individual data series. It conducts extensive liaison with businesses and other organisations, usually speaking in detail to as many as 100 contacts each month. It produces voluminous published analysis of these data,” he says.
Stevens stresses the unprecedented set of complex forces facing the Australian economy.
“There is an epochal change occurring, and Australians are also feeling that. It is overwhelmingly positive for us in net terms, even if our tendency to dwell on the downside is more prominently on display at present.
“The future is uncertain.”
Deadline set for first home buyers stamp duty concessions
THE state government has set an end-of-year deadline on its stamp duty concessions for first home buyers wanting to buy established homes.
First-home buyers currently pay no stamp duty on properties under $500,000 and receive a discount for properties valued up to $600,000.
From January 1, the stamp duty savings will apply only to new homes, including ones bought off the plan.
First-home buyers of established homes will have to pay full stamp duty from that date, which amounts to $17,990 for a $500,000 home and $22,490 for one worth $600,000.
Agents criticised the decision. ”This is not going to help young people jump off the rental market treadmill and into their own homes,” the chief executive of Raine & Horne, Angus Raine, said.
”I’d really urge the NSW government to reconsider this budget measure as it will mean first timers will need to find tens of thousands of additional dollars to buy into the housing dream.”
The chairman of Ray White, Brian White, was also critical. ”It’s our belief that the impost of stamp duty is significant,” he said.
”To take away this benefit to the second-hand home structure in order to just help new home buyers is a bit artificial … we don’t see that as quality thinking.”
Yesterday’s budget announcement coincided with the release of figures from the Bureau of Statistics showing that the proportion of first-home buyers taking out home loans in NSW was the lowest for 6½ years.
The senior economist at the Fairfax-owned Australian Property Monitors, Andrew Wilson, said the end-of-year deadline could motivate first-time buyers this spring.
”It’s like the [first-home buyer] boost all over again,” he said.
”First home buyers may go nuts over the next four months because they’re only going to have that $18,000 saving for a limited time.”
But the development lobby welcomed the decision to focus stamp duty incentives.
”By tying stamp duty concessions exclusively to new housing, the inflationary impact on existing housing will be removed and brand new homes will be more attractive to home buyers,” the chief executive of the Urban Taskforce, Aaron Gadiel, said.
To complement the plan, the government-owned developer, Landcom, will release 10,000 lots for housing over the next four years in the north-west and south-west of Sydney. The government had already committed to releasing 8000 new lots, so this is effectively a 2000-lot jump.
Stamp Duty Concession changes in NSW
Property developers have welcomed the NSW government’s plan to scrap stamp duty exemptions for existing homes, arguing it will help improve affordability and boost construction.
From January 1, 2012, the stamp duty exemption will be limited to newly built homes, including dwellings under construction bought “off the plan”.
The changes are part of Treasurer Mike Baird’s 2011/12 budget delivered on Tuesday.
Urban Taskforce, the peak body for property developers, has welcomed the government’s plan to scrap stamp duty exemptions for existing homes worth up to $600,000.
“We actually think the policy wasn’t working before,” chief executive Aaron Gadiel told reporters on Tuesday.
“In parts of Sydney where first-home buyers predominate, we were seeing prices being pushed up … so it’s inflated housing prices but hasn’t contributed to supply.
“This reform will make housing more affordable for first-home buyers by boosting the new housing supply.”
CEO of the NSW Business Chamber Stephen Cartwright said it was “a very smart change to an existing tax incentive”.
“It’s economically and fiscally sensible,” he said, adding that it would save taxpayers over $1 billion and provide “a shot-in-the-arm” for the housing construction market.
“NSW has underperformed in terms of new housing stock for a range of reasons and this initiative will help address that underperformance,” he said.
Mr Gadiel also said restricting transfer duty exemptions to newly built homes would help the building sector.
“By targeting the scheme, particularly at new housing, what we can expect is that it will stimulate new housing construction,” he said.
But Mr Gadiel criticised the government for not dedicating more funds to new roads in the outer suburbs of Sydney.
“It does show how little is spent on new roads – that will be something the government needs to work on in further budgets,” he said.
He calculated the northwest rail link in Sydney would cost $8-$12 billion, compared with $2.5 billion set aside for new roads in 2011/12.
For the 2011/12 financial year, the government dedicated $600 million towards the planned northwest and southwest rail links in outer Sydney.
A total of $13.1 billion will be spent on transport and roads this financial year, with $7.7 billion for operating and expanding public transport services and $5.4 billion for roads and maritime services.
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