But announcements on new spending and policy are already finding their way out of Macquarie Street. One matter of some interest to tenants - and more than a few landlords, we bet - concerns changes to stamp duty payable by foreign purchasers.
Investors not ordinarily residing in Australia will be obligated to pay an additional 4% surcharge on the purchase of residential real estate. This is considerable. As The Sydney Morning Herald noted, the duty payable on a home purchased for the median Sydney house price of $995,804 would all but double from $40,305 to $80,137. It is expected to raise an extra $1 billion over four years.
The official rationale is that the surcharge serves the broader community interest by raising funds for public amenities. Or, as Victoria, which recently implemented its own surcharge, puts it: as capital growth in residential property is largely attributable to an area's quality of life, foreign purchasers (who are unlikely to pay much if any tax to Australia on income, consumption, and so on) should make a fair contribution to the public spending that delivers that quality.
But from a tenant's point of view, the move is less interesting for the official line as what else it might say about our housing market. Office of State Revenue figures show that the NSW Government has been riding high on stamp duty revenue for the last several years - from collecting $3.3 billion in 2011/12 to well over $7 billion in 2015/16. But, of course, this is inexorably linked to sharp growth in sales prices, in Sydney especially. And the latest Rent and Sales Report suggests prices flattening or slightly declining in a number of LGAs across Greater Sydney. Many well-placed commentators are warning of more of the same - including the Reserve Bank, OECD, property analysts CoreLogic, and ratings agency S&P from last week alone.
Shadow NSW Treasurer Ryan Park said of the surcharge, "We're very concerned that this is a very short-term move based on the fact that the Government knows that the [property] market is cooling, based on the fact that we're all the more reliant on stamp duty." And tenants may have reason to share that concern. Because a reliance on sharp and perpetual growth in property sales to fund spending is a reliance on housing speculation. That is, the same speculation that has sparked price growth to lock tenants who would be homeowners out of the purchase market - in many cases for good. As we explained in one of our favourite posts on the Brown Couch, those frustrated homeowners are not the only tenants missing out. They also tend to be more competitive in the rental market in which they are forced to remain than those on lower incomes - forcing up rents across the board.
Of course, restraining this speculative frenzy is not a matter for State Government alone. It's also a major Federal Election issue, and part of the focus of the excellent Vote Home campaign. But you can be sure tenants would benefit much more from efforts to create a more equitable and accessible housing market than from an extra $1 billion skimmed from foreign participants in our speculative housing market.
On the other hand, some developers have declared that the surcharge will actually have the unintended consequence of driving house prices down. There's precious little evidence to support the position.
There's one more thing to consider: we've also heard our share of stories about foreign purchasers buying properties off the plan, only to leave them empty. The alleged practice would allow the dwelling to be sold as new, negating any need for the purchaser to spend on maintenance or property management. It also restrains rental supply - thereby helping to drive up rents even as new homes are delivered to market. There's nothing definite to establish just how widespread the practice might be, but the UNSW City Futures Research Centre has raised concerns about what it says are up to 90,000 unoccupied dwellings throughout Sydney. A surcharge on stamp duty could function as a disincentive against the practice; As most purchasers will be required to pay tens of thousands of dollars more, they could be driven to take the extra steps required to attain a rental income to help cover it.
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