Posted by Rob Honeycombe on 14 June 2011
pic courtesy themorningbulletin.com.au
The announcement is fresh so the details are still sketchy. But here’s the latest news for home buyers from the Queensland State Treasurer and today’s budget:
If you’re buying a home after July 31st you will now pay more stamp duty. For the median Brisbane house of $430,000 it will be $6,575 extra (for a new total of $12,875 going out of your pocket into the government coffers.) Concessions will remain for first home buyers spending less than $500,000, not that there’s many of them left any more. The duty on an investment purchase remains unchanged.
On our best estimates the number of real estate transactions in Brisbane were lower in 2010 than they had been for more than a decade. This year has so far been the slowest in many agents’ memories, well down on 2010, maybe by as much as a further 30%. So how does increasing the tax on each of these make any sense at all? It’s hard to keep an open mind when the mindlessness of it is breathtaking.
Why the change? Well the government seems to be struggling with balancing the books and had to fund some “headline” good news stories. Here’s the explanation from the budget papers: “The government has introduced a temporary $10,000 Queensland Building Boost grant towards the construction or purchase of a new home for six months commencing 1 August 2011. The Community Ambulance Cover levy is to be abolished from 1 July 2011. These changes are to be funded by the removal of the principal place of residence transfer duty concession.”
I must be missing something here. If the Treasurer thinks the new home market operates in isolation of the established housing market he’s badly misguided. Smacking home buyers around the teeth with an extra $6000 or $7000 of tax will further slow the whole real estate market – established and new. So they won’t be handing out too many of those $10,000 cheques for new homes……
Ahhh – I think I understand!
Please share your thoughts on these changes. And to calculate your new tax go to the stamp duty calculator.
## Thursday 16th June update: Some news today from the State Opposition in their budget reply speech:
“Today we also announced our commitment to reintroducing stamp duty concessions on family homes, a saving that was ditched by Labor in the 2011-12 Budget. We understand that this 125 per cent increase will cost Queenslanders dearly, which is why we oppose it. Our policy will save Queenslanders around $7,000 on the average home.”
Tags: Brisbane home buyers, Brisbane home prices, Brisbane real estate, stamp duty Queensland
Posted in property taxes and rates etc | 5 Comments »
Posted by Rob Honeycombe on 28 May 2010
Amongst the mile of changes to our tax system recommended by the Henry Review, there’s one that many in the property industry have dismissed out of hand. Mr Henry and Co. proposed that land tax should be paid by all property owners.
It’s controversial because it’d be a massive increase on the current land taxes that only apply once you own a minimum value of property (unimproved or UCV – see your rates notice for yours). In Queensland it’s currently $350,000 for company-owned or $600,000 for individuals (approx 2 good Brisbane houses).
But maybe the critics have been too hasty – and hear us out here! Henry suggests a simultaneous scrapping of stamp duties on the transfer of property, arguing this tax leads to inefficient use of our housing stock. A typical inner Brisbane house purchase costs the buyer $22,000 in stamp duty ($15,000 if they’re owner-occupying) and this high cost penalises the changeover of housing. Empty-nesters for example are staying in the 4 bedder long after the kids have left home and the spare bedrooms aren’t been used.
An ABS survey suggests one in six Queenslanders have been in their home for longer than 20 years. They also found 14% of us move to get a bigger place, compared to less than 3% who downsize. Addressing the housing affordability issue, Henry says less hurdles to moving will encourage us to a smaller place. Why not swap the spare bedrooms for a more modern place with other features we want?
The States will rightly be nervous of scrapping stamp duties, with more than 40% of their income coming from property transactions. But a broad land tax would be more predictable and allow better govt budgeting. Of course as real estate agents we love the idea – we’d vote for a mandatory 5 years maximum in your home!
But what do you think? Would you prefer to pay land tax or stamp duty? Please post your comments.
Tags: Australian Bureau of Statistics, Brisbane housing supply, Henry Review of tax, land tax, stamp duty Queensland, Unimproved Capital Valuation Brisbane
Posted in property taxes and rates etc | 4 Comments »
Posted by Rob Honeycombe on 10 September 2008
Beggars, as most first home buyers consider themselves, can not be choosers. So the September 1st cut in their stamp duty thresholds are definitely welcome. In the Sunshine State there’s now zero duty on a first home of $500,000 or less, up from the previous cut-off of $350k. Despite the recent interest rates cuts it’s still tough to get into the market so governments need to act. All other owner-occupiers got a small reduction too with the 1% flat rate extending to $350k, up from $320k. These are all great news for home buyers in Bundaberg and Cooktown. But in downtown Brisvegas they’re the proverbial drop in the bucket. We don’t have too many $400,000 homes! The first home buyer concessions stop at $550k, so for example buying a $750k home to occupy will come with a stamps bill of $19,600, down just $150 since the changes.
Now we don’t want to be seen to be ungrateful… but is $150 really going to help inner-Brisbane home buyers? Pizza and beer on move-in night maybe, while the government coffers swell with another twenty grand.
Hidden in the government’s detail is the increase on duty for investment purchases. That same $750,000 property bought as a rental now has a tax grab of $26,775, up $500 since Captain Bligh’s changes! This will flow on to tenants in higher rents of course, possibly reducing their savings and guaranteeing they never take advantage of those lower duties on their own purchase!
Meantime this week’s new ABS construction stats show loans for new houses have dropped to their lowest level since 2002. We’re not building enough and ANZ Bank’s senior economist says the growing housing shortage is setting the scene for “the mother of all housing booms”. They say pent-up housing demand is heading for record levels.
Serious initiatives have to be looked at for improving the supply of new housing, including long overdue reductions in taxes on new land releases. For inner city suburbs what about Morris Iemma’s idea (remember, used to be the NSW Premier!) for home owners to build and rent a “Fonzie Flat” in the backyard. Fonzie starred in TV’s “Happy Days” and his was over the garage. Morris suggested owners could earn rent from the flats but still retain the Capital Gains Tax exemption for their otherwise owner-occupied homes.
In the meantime maybe that $150 stamps reduction could be changed to a free letterbox for every new home built?!
Tags: Australian Bureau of Statistics, Brisbane housing supply, capital gains tax, first home owners, stamp duty Queensland
Posted in property taxes and rates etc | No Comments »
Posted by Rob Honeycombe on 8 May 2008
With the Treasurer warming up for his Queensland state budget on June 3rd it’s timely to ‘blue-sky’ how our pollies could actually be helping with housing affordability. What’s well-reported is the vast undersupply of housing, with market analyst Michael Matusik putting Queensland’s annual shortfall at 44,900 homes. Interesting to note is the revenue our state generates from property – with more than $3.7billion (yes billion) flowing from stamp duties on sales, land taxes and duties on mortgages.
Despite plenty of talk in 2000 that the GST could eventually replace state taxes, some 28% of our state’s revenue still comes from taxes and duties, with an unhealthy dependency on the property industry.
Would reducing some of these help our housing affordability crisis? While the government is scrapping mortgage duty (now down to 0.2% and nil from January 1st 2009) it’s stamp duty where the state really hauls in the bucks, up 16% this year to $2.8billion. While you pay no duty to buy listed shares, a property investment of $450,000 will land you a stamp duty bill of $14,225. It may be cheaper than other states but it’s still a huge disincentive to investors, and that impacts on tenants through higher rents. Should an investor pay more stamp duty than an owner occupier? ($600 more in the above example). There’s a third of our population that rent so surely we need incentives to create new housing for them.
Victoria this week moved to further reduce their stamp duty rates, and they remain the only state to offer a genuine incentive to build new property. In the Garden State buying off the plan means hefty savings in duty compared with established property – the amount is calculated only on what exists at the date of contract, usually just the land. It’s a simple idea, offers an immediate encouragement to bring new housing supply online and Queensland could do the same thing on June 3rd. Construction costs are still rocketing ahead with home builders and developers struggling to make new housing viable, and we’ll all grow old waiting for that to change.
With stamp duty revenue soaring up along with housing prices our government’s had a huge, largely unexpected windfall over the past three years. Solid moves to encourage new housing supply must surely be on their agenda.
Tags: Brisbane housing affordability, Brisbane housing supply, construction costs Brisbane, Michael Matusik, stamp duty Queensland
Posted in property taxes and rates etc | No Comments »
Posted by Rob Honeycombe on 21 November 2007
Great to see both contenders for this Saturday’s election have released policies aimed at giving first home buyers a ‘leg up’ into the market. Neither party though seems to be proposing any ‘watershed’ solution for the major hurdle to affordability – supply. The Real Estate Institute of Australia estimates our national undersupply this year alone is 20,000 homes. And household numbers are growing much faster than the population (with divorces, later marriages, oldies living longer etc). So in the major growth areas like inner-Brisbane a shortage of properties means buyers and tenants alike are really feeling the pinch.
Each of the Coalition and Labor has announced “home saver account” schemes to give first time buyers a tax-benefited way to save for a deposit. There’s some neat ideas in each of their proposals: under 18’s for example can get $1000 inside their birthday card from Mum or Grandad, and the grown-ups get a tax deduction for the account contribution. And if a parent co-purchases with the first-timer their portion would be Capital Gains free when the home’s finally sold (or the kids buy them out). As agents it all looks good to us!
But as Treasurer Pete says “If people with more money were just chasing the same number of houses, the price of the houses will go up.” The Property Council’s done some great work analysing how to improve the supply of homes (see www.affordablehome.com.au ) and they’ve rightly highlighted the massive infrastructure costs borne by each new home buyer. It might be more politically acceptable to load developers with costs rather than increase general taxes or rates. But the reality is that end purchasers wear these costs, and this drives prices up and supply down. Each new building must cover its own water, sewerage and other direct works. But as a community we need to ask if we expect buyers of new properties in our inner city to fund the upgrading of surrounding footpaths and roads and libraries and parks?
According to the Property Council the infrastructure costs on a new Brisbane apartment have risen 500% over the past 11 years. That’s government putting its hand further out for contributions to local amenity, and more often than not they’re amenities the whole community makes use of every day. Add in the new minimum standards for housing with requirements like water efficiency items, fire safety requirements and increased sound attenuation – all needed but adding to the cost. Then tip on other government fees and charges, and new properties have a whopping built-in cost – even before the buyer pays their stamp duty. As a community we need to ask if we really do want to improve housing affordability, and allow more of our population to own their own home. If so we need our governments at every level to wind back the recent increases in new property costs, and share the burden across all tax payers. Hardly an election winner is it?!
We’d like your view – should indirect infrastructure costs be paid by new property buyers or funded out of general taxes? Tell us what you think!
Tags: Brisbane housing affordability, Brisbane housing supply, capital gains tax, first home owners, Property Council of Australia, stamp duty Queensland
Posted in Brisbane's future & new infrastructure, Brisbane's sales market, property taxes and rates etc | No Comments »
