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The High Price of Government
The NSW Government needs to make some decisions about the future of Sydney and NSW as a whole.
According to Real Estate Institute of NSW President, Mrs Cristine Castle, there are two questions the NSW Government should answer. Does it want to continue to drive residential property investment into other States through its addiction to property taxes?
And does it want to punish people who live in new residential developments with exorbitant infrastructure taxes and fees?
“The latest REINSW Residential Property Management Survey Results for March shows that vacancy rates in Sydney have plummeted to 1.7% percent inner and middle Sydney and 2 percent for Sydney as a whole,” Mrs Castle said.
“What this means is that rents will rise for all tenants, including low income earners, as accommodation becomes harder to find.”
The cause twofold. The first is that more people are buying homes to live in due to greater affordability and the second is that NSW’s property tax and infrastructure charge regime is worse than other State’s, which is forcing residential property investors to spend their money elsewhere and fewer property investors means fewer houses and units to rent.
“A recent study by the Property Council of Australia calculates that more than one third of the cost of some Sydney housing packages is the result of government related taxes, charges and compliance costs,” Mrs Castle said.
“Taxation is the cost of civilisation and many of these costs are justifiable but others are not.”
Infrastructure levies by local councils that can add more than $100,000 to the cost of a block of land are difficult to justify.
State Planning Minister, Frank Sartor was recently reported as saying these levies are a “backdoor cash-cow” and are often used for buying public art, council computers and other items that should be paid for out of general rates.
However, the NSW Government is considering its own levy called “special infrastructure contributions” that threaten to push the price of new land even higher.
“Given the NSW Government’s addiction to land tax and stamp duties this new levy is likely to become a cash-cow for the State and investors and first home owners in particular will suffer. And the risk is that even more investment will flow interstate taking jobs in the construction industry and economic prosperity with it,” Mrs Castle said.
“Investors are already concerned about the NSW market. New construction is down and there is anecdotal evidence that some large developers are not releasing units already built until investors return in greater numbers.”
“However, higher infrastructure levies will also affect owner occupiers because the artificially inflated price of land in new estates may be even more expensive.”
In recent days it has been reported that the State Government will release an extra 7,500 housing lots near Liverpool and create a new suburb and Mrs Castle commended the Government for the move that will help ease Sydney’s chronic new land shortage, however, she said it still isn’t enough.
“The Government must ensure that NSW is competitive with other States in encouraging investment and development to increase the stock of available homes and that the cost of housing is shared equitably across the community.”
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