NSW Labor chief Chris Minns’ promise to axe first-home stamp obligation will drive up property costs

Mr Minns mentioned 95 per cent of first dwelling consumers would both pay no stamp obligation or much less stamp obligation underneath Labor’s proposal.

However Centre for Impartial Research chief economist Peter Tulip mentioned Labor’s expanded stamp obligation exemption would push home costs larger.

Affordability to worsen

“Report after report finds we have now an enormous housing affordability drawback in Australia, and subsidising demand by issues like first dwelling purchaser grants makes the issue even worse,” Dr Tulip mentioned.

“It helps a favoured few, and makes affordability worse for everybody else.”

Whereas it’s tough to quantify how a lot larger the coverage would push costs, Dr Tulip mentioned it was most likely small in comparison with different distortions.

“It clearly goes within the mistaken path,” Dr Tulip mentioned.

Mr Minns has additionally vowed to abolish Premier Dominic Perrottet’s coverage to let first dwelling consumers pay a small annual land tax as a substitute of stamp obligation on purchases under $1.5 million.

Below the coverage, which can come into impact subsequent week, first dwelling consumers bidding on a property value lower than $1.5 million may have an choice to pay an annual price equal to $400 plus 0.3 per cent of the land worth, as a substitute of an up-front lump sum of stamp obligation.

On a home valued at $1 million, this equates to a selection between an upfront cost of $40,090 or an annual price of about $2200.

Compelled ‘into flats’

NSW Treasurer Matt Kean mentioned on Monday the Coalition’s land tax plan would shave as much as two years off the time it takes a primary dwelling purchaser to avoid wasting for a house.

He criticised Labor’s stamp obligation exemption for excluding first dwelling consumers from coming into some segments of the market the place costs exceeded $1 million, pointing to suburbs like Coogee the place even the median residence worth is $1.3 million.

“There are some suburbs the place you’re not going to have the ability to purchase a home for those who’re a primary dwelling purchaser, so it’s forcing first dwelling consumers into flats in the event that they’re fortunate,” Mr Kean mentioned.

Dr Tulip mentioned if both Labor or the Coalition wished to enhance housing affordability, they might enact insurance policies to increase housing supply.

“I feel it’s comprehensible that politicians do [first home buyer incentives]. However it’s a foul factor, and in the event that they need to do one thing severe, they should do one thing about planning reform and boosting provide,” he mentioned.

Knowledge launched by the Australian Bureau of Statistics on Monday confirmed a pointy 9 per cent fall in month-to-month dwelling approvals, which are actually monitoring near lows seen in mid-2020.