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NSW Budget Provides Few Incentives For Housing Investors
“Given that the NSW Government acknowledges that the property market and land ownership is such an essential revenue generator for the State and that building construction is such a vital industry in providing jobs and growth, it is disappointing that the State Budget has not done more to encourage investment and stimulate the economy,” Real Estate Institute of NSW President, Mrs Cristine Castle, said today.
“It is of great concern that the NSW Government blames the Budget’s deficit on the easing of the property sector because it is a clear indication that the Government is too reliant on property to provide windfall taxes,” Mrs Castle said.
“It is also a concern that the Government appears to be hoping for another property boom in the future to bring the State’s finances back into surplus.”
Mrs Castle said the Treasurer, Michael Costa, mentioned property, housing and homes 23 times in his speech but gave little indication of how the Government would attract greater property investment in NSW.
“There is enormous competition between the State’s to attract investment for residential housing and the NSW Government must do more to encourage this growth by reducing the tax burden and introducing further incentives.”
“Vacancy rates continue to suggest that the stock of residential accommodation available to families and low income earners is low and falling, which is directly related to the unwillingness of investors to purchase and provide housing without further tax incentives.”
“The end result is that rents are expected to rise and the Government will be forced to spend more on public housing, which we have already seen in this Budget, with the Government pledging an extra $38 million on public housing, bringing the total to $712 million in 2006/07.”
“The averaging of land tax commitments over three years from 2007 may soften the blow of peaks and troughs in valuations but it will not alter the total amount of tax that most land holders will pay over a period of time and it will not cap the total tax take that land tax provides as a percentage of State revenue.”
“The Government has also missed an opportunity to lower the land tax rates to encourage smaller investors or reward the long-term investors that provide housing stock by phasing out taxes over the life of their investment.”
“Thankfully yes. The Government has resited any temptation it may have had to reduce the Stamp Duty exemptions that first home buyers currently enjoy so that they can continue to take advantage of the exceptional affordability found in the current property market,” Mrs Castle said.
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