Until first home buyers receive actual support… they will continue to struggle to compete
- Written by Tim McKibbin, CEO, Real Estate Institute of NSW
Affordability is never far removed from a discussion about real estate but we’re seeing that discussion take a different turn.
Namely, how long can the NSW Government afford to let its current tax policy go unaddressed by proper reform?
The environment for first home buyers is more challenging than ever. The leap from renting to buying is daunting to the point that for many, it’s impossible.
Saving the required deposit is becoming harder and harder as price growth continues and rental costs increase, particularly in regional markets which have boomed through the pandemic.
Until first home buyers receive actual support, potentially through an exemption from paying stamp duty as REINSW has suggested, they will continue to struggle to compete with existing property owners and investors.
The scheme announced by the NSW Government which could see it take an equity stake in a first home buyer’s property is no solution to the affordability issue, as it seeks to treat the symptoms, not the cause.
At the same time, the NSW Government’s addiction to stamp duty is increasingly under the spotlight. Global ratings agency Moody’s recently warned of the revenue concentration risk faced by the state.
With over 13% of the state’s revenue coming from transfer duties, Moody’s says, any slowdown in activity or prices will jeopardise efforts to repair the budget.
REINSW will continue to highlight the ambiguity of collecting huge amounts of tax from property consumers while also claiming the introduction of a new tax on property will somehow address affordability concerns.
On the ground, February is playing out largely as expected. The strength of demand is fuelling strong activity and supporting prices.
Despite what seems an expectation in some quarters that a slowdown will occur, we’re not seeing it yet.
Volumes are up and values are holding firm. More new listings are becoming available each week. REINSW members report extremely strong enquiry levels for well-priced properties and our auctioneers are seeing the intensity of buyer competition first-hand.
Buyers may be exercising caution not to overpay but they are certainly not shy in putting forward an offer. The borders open soon to add to demand while regional markets continue to outperform.
