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Canberra Today 6°/9° | Saturday, October 23, 2021 | Digital Edition | Crossword & Sudoku

How much is the housing hand-out lily being gilded?

“Abolishing stamp duty for the purchase of homes is part of the long-term tax reform of the ACT government. Rates are increasing rapidly, but stamp-duty concessions are moving at a snail’s pace,” writes political columnist MICHAEL MOORE

GOVERNMENT hand-outs make great political mileage. However, it is taxpayers’ money that’s being distributed and such generosity always needs careful examination. 

Michael Moore.

Who are the winners? Who are the losers? What are the conditions? Who pays? How much is the lily being gilded?

Abolishing stamp duty for the purchase of homes is part of the long-term tax reform of the ACT government. Rates are increasing rapidly, but stamp-duty concessions are moving at a snail’s pace. It is a 20-year program begun in 2012. 

The July edition of “Our CBR” features a front-page picture of a young couple and their dog with the headline “Stamp duty abolished for all off-the-plan units up to $500,000”. Then “first home buyers and Canberrans looking to downsize” will save up to $11,400 off the up-front costs of a home purchase.

Why only “off-the-plan” units with a value of up to $500,000? Why just off-the-plan? Where can you buy developments for below $500,000? What about units that are already built? Does this suit investors? What about struggling families who are seeking to buy a home with a garden? 

The government argues that this is just the next phase “in the ACT government’s ongoing tax reform program and reflects our commitment to improving housing affordability”. 

So much for families! According to Allhomes listings there are only two developments that meet the half-million dollar criteria. They are both in the suburb of Taylor and, elsewhere, I discovered a possibility at Founders Lane in Civic. 

The ACT revenue site clarifies that this offer is available to people who do not own another property. At least the taxpayer is not subsidising investors.

So who is really going to benefit? 

Young couples, as featured in the picture, are certainly better off – for the moment, provided they are happy living in Taylor! 

Developers who are planning on building this style of cheaper units are also winners. There is no restriction on the location or size of the development in which the apartments are constructed – just a purchase off-the-plan. Developers will have much more certainty about how many units they can build. Their financial situation will be much more favourable.

Who are the losers? 

This targeted approach omits those who would build homes with gardens. The approach exacerbates the already skyrocketing value of homes on single blocks of land. Perhaps COVID-19 and lockdowns have modified community views on apartment living compared to the traditional home and garden.

Singles or couples who do not have a family or are not intending to have one may be looked after. Those who are hoping to have a family will have to wait. 

“The next phase of the stamp duty reductions,” the newsletter tells us, “will be targeted at the lowest property value thresholds for owner-occupier purchases”.

The government recognises the barrier for many people to enter the housing market that is created by excessive stamp duty: “That’s why the next phase of reform will be targeted at increasing the benefit most for people buying lower-value property to live in”. 

The term lower-value property will have to be considered very carefully if the government is serious about getting lower-income families into housing.

The current government cut off is $500,000. However, the median house price in Canberra for the March quarter was $927,577. And all indications are that the current quarter has seen another rise.

Domain Senior Research Analyst Dr Nicola Powell pointed out in late April that the “persistent lack of stock coupled with unrelenting high buyer demand and record-low interest rates has continued to fuel this “extremely rare rate of growth”. 

At the time Dr Powell predicted that the mean price for Canberra houses would be around a million dollars by the end of June. This presents serious challenges to would-be home owners.

The government is able to provide some support. However, if the mean price of housing jumps around $70,000 in a matter of three months, the impact of abolishing $11,400 of stamp duty may be better than a kick in the pants, but it is much less significant than at the start of the year. 

It is time to see much more support with the other levers of government, and the first should be land supply.

Michael Moore is a former member of the ACT Legislative Assembly and an independent minister for health. He has been a political columnist with “CityNews” since 2006.

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Michael Moore

Michael Moore

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3 Responses to How much is the housing hand-out lily being gilded?

Palmerston's Lament says: July 14, 2021 at 7:19 am

While touching on it, you are missing a bit of the equation here. The likely rates increases over the future years are now such that any forecast savings have long since evaporated for the individual, however, the government’s revenue has (and will) continue to increase beyond the original forecast.

Additionally, as noted on other media sites, Chief Minister Andrew Barr brought this into operation when he was Treasurer in 2012. Did he really think he would still be in the Assembly in 2021 and in charge of this? Or was the belief/hope/strategy such that it would be for a government of a different hue to dismantle at some point in the future?

In a different electorate, this issue would be an electoral game-changer but the Opposition and the Fourth Estate seem happy to let it tick along without too much protest.

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Anthony says: July 14, 2021 at 1:01 pm

The media gives left wing governments a free pass even when they implement right-wing policies in the form of regressive taxation.

Reply
Max says: July 16, 2021 at 3:27 pm

Laments the insane capital appreciation of real property, how unaffordable and out of reach it is becoming for the average family, then, in the final paragraph, advocates for expansive taxpayer subsidisation of people who are better off and buying in substantially higher price segments. Final paragraph completely undermines the entire article. That’ll do me.. How about we abolish middle-class welfare, like negative gearing, or introduce other measures to put downward pressure on property in those higher price segments. Don’t give $10,000 to struggling, low-income couples and families to squeak into their first shack. Instead, give $50,000 to flourishing, middle-income families, gay, lesbian and trans couples, etc.
Insight much?

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