In October 2018, in response to ten consecutive months of declining building approvals for private sector houses, Master Builders SA released “Make Housing Great Again”, our five point plan to improve affordability and protect jobs in the industry.
One of the key recommendations was a stamp duty exemption for first homebuyers on new builds up to the median house price, with a long-term view to complete abolition on new builds.
Master Builders SA engaged respected management consultancy Hudson Howells to conduct an investigation into the financial and economic impacts of stamp duty exemptions on new house/land packages, and state taxation generated from the housing sector associated with a potential stamp duty reduction. The report, available here (link), shows that abolishing stamp duty on newly built homes would:
Master Builders SA Chief Executive Officer Ian Markos said the report provided a compelling case for the Marshall Government to abolish stamp duty on new builds up to the median house price in this year’s State Budget.
“Stamp duty distorts the supply and demand balance for new housing and is a major impediment to economic growth,” said Mr Markos.
“As housing costs have increased substantially in recent decades, the weight of stamp duty hasn’t come down at all. The amount of stamp duty is enormous now, about $20,000 on the current median house price of $470,000. For a first homebuyer, that’s a massive impost and possibly the difference between owning their own home or not.
“Our policies to improve affordability and protect jobs in the housing industry are based on what is proven to work under both Liberal and Labor governments interstate.
“As noted by the ABS, the strong growth in loans to first home buyers has been driven mainly by changes to first home buyer incentives made by the New South Wales and Victorian governments from 1 July 2017.
“In 2017/18 the number of first home buyer dwellings financed increased by 34.95% in Victoria and 73.60% in New South Wales compared to the previous year. South Australia recorded just an 11.52% increase.
“What do we want for South Australia’s economy? More jobs and more houses built, so what do we do? Tax both of them. It doesn’t make any sense. The independent Hudson Howells report shows that an exemption will increase jobs and Gross State Product and with net State Government financial gains. Even in the “Low Case Scenario”, a stamp duty exemption on new builds up to the median house price would deliver a Net State Government gain of $17.58 million.
“Eliminating stamp duty on new builds must be a top priority for this year’s State Budget. We have suffered 14 consecutive months of declining building approvals, and the latest industry forecast is for a decline in the value of work in each of the next four years. A stamp duty exemption is supported by other industry associations and is an essential policy if we are serious about protecting jobs in the housing industry, improving affordability and addressing the flow of young South Australians interstate.”
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