Treasury's stamp duty move to increase state revenue: Craig D'Costa

GUEST OBSERVER

The domestic market fundamental’s remain strong for housing development following yesterday’s announcement from The Treasury to implement a four percent stamp duty charge on foreign investors.

The Treasury’s move may intend to stabilize foreign investment and increase revenue for the State, however it has little regard for dealing with the ever increasing issue of housing affordability, particularly in Sydney. 

Based on the Sydney median house price of $995,804, the stamp duty bill for an off-shore investor will increase from $40,305 to $80,137 and generate $1 billion over four years for the government.

Increased investment in employment, transport, health, education and recreation infrastructure has been committed by the private and public sector particularly the South West Sydney, and for this reason there is a continued surge of new property sales and importantly ‘occupation’ in developments offering properties well below Sydney metro’s median price.

Sekisui House Australia’s outlook is supported by the newly reported industry data. 

According to the latest Autumn Housing Industry Association (HIA) report for NSW, the ‘AIG–HIA Performance Of Construction Index’ reports new orders in the house sector during early 2016 were somewhat stronger than at the end of 2015.  The index reading in March 2016 was 53.0 points, indicating an expansion in new orders during the month, a positive signal for detached house building activity over the near to medium term.

As the Government shifts goal posts for property investment particularly from off-shore investors, it’s important to focus on the owner-occupier market returning to the fore. Foreign property investors will always play their part in the NSW residential market, but with lower Loan-to-Value ratio being offered by the major banks, we foresee property sales for occupation potentially taking the lead in 2016 and beyond.

Craig D'Costa is the project director at Sekisui House Australia and can be contacted here.