Australia Why scrapping stamp duty will making housing more affordable
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Public housing tower residents who endured the nation's harshest hard lockdown last year say they are concerned not enough has been done by Victorian authorities to support the communities during the Melbourne outbreak. On Friday, Victorian health authorities revealed the suspected index cases in a cluster of seven people were infected with the Delta variant, which was first detected in India and is believed to be more severe than previous strains.
Scrapping hated compulsory stamp duty could be the key to making housing more affordable for young Australians.
Since January, Sydney's median house price has surged by more than 15 per cent to an even more unattainable $1.186million, CoreLogic data for May showed.
Under existing rules someone buying a $1million house has to stump up $40,000 upfront and a borrower purchasing a $500,000 apartment has to part with $20,000.
But aTreasury paper on Friday said scrapping compulsory stamp duty and giving home buyers the option of an annual land tax would in fact make houses cheaper by boosting supply.
'Sadly most of my friends have already moved away'
The average house in Guernsey now costs more than £500,000, which is more than in London.Rapidly escalating prices, minimal space for building and a lack of social housing have conspired to create the situation.
'Removing stamp duty would result in a better allocation of housing: when people can move home more easily, they will be less likely to live in homes with under-utilised spare rooms,' it said.
'This would permit any given level of housing stock to accommodate more people, resulting in an increase in effective supply of housing, and exerting downward pressure on prices.'
Giving home buyers the option of paying annual land tax would be the biggest shake-up to property taxes since stamp duty was introduced in 1865.
NSW Treasury is now proposing a minimum $400 a year land tax for owner-occupier residents and a $1,500 floor fee for investors to 'ensure a minimum contribution from all forms of housing'.
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Affordable housing in Ketchum—the Idaho resort community adjacent to billionaire and celebrity playground Sun Valley—has been a problem for decades. But the situation is becoming so dire in the wake of COVID-19 that city officials are considering an unusual range of quick fixes—including building tent cities and RV parks for the common folk in the ultra-rich mountain town, where the average median home listing price is hovering above $900,000. Residents and housing activists say their friends and neighbors, some whose families have lived in Ketchum for generations, are being priced out as landlords sell buildings to well-heeled buyers and out-of-town investors.
Treasurer Dominic Perrottet said a land tax option would create jobs and see 300,000 more people achieve home ownership.
He last year proposed a 0.3 per cent land tax on every dollar above $755,000 plus $500 which would see still see a buyer of a median-priced $1million Sydney house pay $1,216 a year.
That amount would take 32 years to surpass the upfront $40,000 they would have paid in stamp duty and would be contingent on annual adjustments to the land tax threshold, known as the unimproved land value.
But a new discussion paper released today proposed a higher 1.1 per cent rate for investor landlords who rent out their property.
Investor landlords and commercial property owners already pay land tax in NSW.
In 2021, under existing laws, those real estate owners are paying a 1.6 per cent tax for every dollar over $755,000 the property is worth, plus $100.
Nearly two thirds of Australians think home ownership won't be an option for young people as property prices rise
The Australia Talks National Survey finds 65 per cent of Australians think owning a home isn't really an option for most young people anymore. (774 ABC Melbourne: Simon Leo Brown) Stephen Green hopes to buy a home for his family of four, but that dream has so far proven elusive.The 38-year-old Melburnian says he and his wife Bronwyn have "pretty good" incomes and have been saving for the better part of a decade, with the last five years being "pretty hardcore savings"."The smashed avocado metaphor that was used to describe our generation as kind of overspending, I think is really unfair," he says.
Gabriel Metcalf, the chief executive of the Committee for Sydney urban policy think tank, said the federal government should give financial incentives to NSW to scrap stamp duty as part of a Covid recovery.
'As we come out of the pandemic, now is the time to reform and bounce back stronger as a state and nation,' he said.
'Abolishing stamp duty on property purchase and replacing it with a broad-based annual land tax will be a key part of our bounce back.'
The surge in property prices across Australia is so bad the banking regulator this week released new data showing a surge in the proportion of borrowers who owe the bank more than six times what they earn, with interest rates at a record low.
During the March quarter of 2021, the share of borrowers with potentially dangerous debt levels climbed to 19.1 per cent, up from 17.3 per cent during the final three months of 2020, Australian Prudential Regulation Authority figures showed.
Mr Perrottet is delivering the Budget for 2021-22 on June 22 and is expected to announce more on the stamp duty changes.
Kiwis show how it’s done on housing while Australia just sits and talks .
While Australia wrings its hand about house prices, the New Zealanders just get on and try to solve it.In a statement from the Reserve Bank of New Zealand (RBNZ) yesterday, the Kiwi central bank added debt-to-income levels (DTI) to its macro-prudential “toolkit” with the agreement of the minister of finance.