It has been put to me that Queensland buyers are deferring signing contracts until after the state election on the 24th March, as they expect a change in government and LNP has promised to reinstate the stamp duty concession on owner-resident property.
Here is my response.
Firstly, something seriously needs to be done about the taxes and charges on property transactions and development in this country. When factoring in both buyer and seller costs, Australia has the fourth highest property taxes in the world at just under 14% of the property's value. Only Belgium, France and Greece are higher. Total property taxes average around 8% across the western world and are under 5% in the USA, New Zealand and the UK.
If we are going to keep stamp duty on property sales, then at least we can make it uniform across the country. An investor paying the median price for a property in each state/territory can pay between $10,000 and $27,000 in stamp duties, depending on location. The same applies for owner residents and fluctuations for first home buyers, which are the greatest of all, with first timers in Queensland, Western Australia and Northern Territory paying virtually nothing at all, whilst the transfer duty for first timers can be as high as $23,000 for an averaged priced home in Melbourne and close to $21,000 in Canberra.
Secondly, despite the increase – about $8,000 on average – Queensland still has the cheapest stamp duties on established property across the country. See the two tables below.
Thirdly, the increase has not stopped the market much at all – some real estate agents say it has – but the real factor is the number of resales on the market across SEQld and the amount of choice buyers have, and hence the amount of discounting vendors need to do to make a sale.
The timing of the increase – June 2011 – wasn't great. It gave buyers more bargaining power – but again, its impact on sales volumes last year wasn't that great. Sales are picking up now – been doing so from about late October last year – yet the higher stamp duties still apply...if the market was rising last year it wouldn't have even been noticed. The proof is regional Queensland...it has had little to no impact in Townsville, Mackay, Gladstone etc.
Yet, some buyers might be now deferring buying until after the election to avoid paying higher stamp duties. This illustrates how government intervention distorts the market – i.e. boosts, first home buyers' grants and concessions.
And finally, instead of reinstating the stamp duty concession for owner-residents buying established property in Queensland, the successful party should remove stamp duty from off-the-plan transactions. The impact – as shown in both Victoria and more recently New South Wales – should be immediate and very positive.
Our work for the Property Council of Australia late last year found that removing stamp-duty from off-the-plan sales is likely to increase new housing starts across the state by between 10% and 15% per annum. Yes, every year!
In contrast to established homes, stamp duty on new dwellings across Queensland is high when compared to New South Wales and Victoria. See the table below.
Queensland needs a competitive advantage. The state's competition is New South Wales and Victoria. Dropping stamp duty for off-the-plan purchases will help get Queensland back to a more level playing field.
It is sad that such an important issue as this one is buried in the political charade.
I truly believe that governance is too important to be left in the hands of the public at large. One of the major reasons we get served up such political (and policy) nonsense is that it must appeal to the lowest common denominator. Instead of having leaders with gravitas and policy for the greater good, we have celebrities (and poor ones at that) and pork-barrelling.
Removing compulsory voting would be a step in the right direction.