With the majority of states (South Australia will need to wait until September due to their change in government) receiving their 2018-19 budgets, here’s how the property industry fared across the nation.
New South Wales
The second NSW budget handed down by Treasurer Dominic Perrottet had an aim to tackle transport, health and education projects, but left a lot to be desired when it comes to easing housing affordability.
$6 billion has been pledged to deliver 170 new and upgraded schools, as well as $2.3 billion for hospitals. This joins $3 billion for West Metro and $258 million to commence the Parramatta Light rail, which the government hopes will support growth in Sydney’s west.
“Overall it is a strong fiscal outcome; a good, disciplined budget,” said Property Council NSW Deputy Executive Director Cheryl Thomas.
“There is, however, a notable absence. There is nothing in today’s budget to bolster the achievement of the Premier’s objective to see 61,000 houses built annually in NSW to 2021.
“It is a major challenge to achieve these numbers and requires continued support,” Ms Thomas said.
The annual land tax revenue from property investors came in $148 million higher than the forecasted $3.68 billion, but a slump in the NSW market saw stamp duty come in $960 million lower than expected.
Despite hopes from property experts, the budget didn’t see any stamp duty relief or reform, with the Treasurer saying he would instead support first home buying.
Build-to-rent also wasn’t supported in the budget.
Stamp duty reforms weren’t the order of the day in Victoria either when their state budget was handed down in May. To the disappointment of industry bodies, Land Tax wasn’t addressed either.
“While the Premier says his government is getting things done, it has failed to get one of the most important things done,” REIV President Richard Simpson said.
“We believe that a reduction in taxes on land, and on real estate transactions, would incentivise investment and it is hard to understand why the Government has missed this opportunity to address the Land Tax issue.
“Property taxes will account for over $11 billion of the state’s $24 billion tax revenue in 2018-19. It is a heavy burden indeed and one that needs to be reduced.”
Individual households now have the ability to receive a $50 kickback if they compare energy bills online, and the government pledged $50 million on community projects in the outer suburbs.
REIV also critiqued the lack of provision in the budget for increased public housing, noting that there were no plans to aid rental stress in the state.
“In this election year, the REIV will continue to urge both sides of politics to commit to a reduction in the tax burden on property,” Mr Simpson said.
It was much of the same in Queensland, with the government’s refusal to address concerns over stamp duty receiving the ire of industry bodies.
Between FY 2016-17 the Queensland government received $3.278 billion in stamp duty, compared to $3.005 billion the year prior.
This figure equates to 25 per cent of total taxation revenue in Queensland coming from stamp duty on conveyances according to the Real Estate Institute of Queensland (REIQ). Add in land tax and other property taxes and this figure jumps to 38 per cent.
REIQ CEO Antonia Mercorella said the State Government was taking too much from the property sector.
“The reality is simply that stamp duty is threatening our affordability,” said Ms Mercorella.
“The REIQ has long advocated for the abolition of stamp duty. It does the property sector no favours and the State Government is now in danger of killing off the golden goose,” she said.
$339.1 million was pledged for upgrading social housing, $733 million has been pledged for planning of the Cross River Rail and $534.3 million went to the Toowoomba Second Range Crossing.
The other property news in the budget was an extension to the First Home Owner Grant, which is currently $15,000, of 12 months. There have been concerns over the effectiveness of schemes aimed at First Home Buyers, namely due to their tight restrictions.
The 2018-19 WA State Budget was handed down in May and brought with it a controversial increase to the initial suggestion of a foreign owner duty surcharge, rising it from four per cent to seven. This is set to come into effect from 1 January 2019 and concerns are it will further hinder foreign investment, but without the desired effect of improving affordability.
The Real Estate Institute of Western Australia (REIWA) said there was no evidence than the surcharge would mitigate unsustainable rising house prices, and it could cause an increase in rents.
Households also didn’t fare well in the budget, with a rise of 4.8 per cent in yearly fees and charges.
Transfer duty rates stayed the same, as did the exemption for first home buyers, but the First Home Owner Grant was not re-introduced for existing dwellings.
It’s thought that with the state’s continued debt issues showing no signs of easing, it’s unlikely there will be much change on the horizon for homeowners and buyers in the coming budgets.
However, there was a pledge of $394 million for social and affordable housing, including the creation of 1390 new homes. $15.3 million was also pledged for the establishment of infrastructure.
Treasurer Peter Gutwein said that Tasmania’s state budget showed that they were on ‘the cusp of a golden age’, but there were few new additions to the announcement. One of the only surprises was the plan to sell the historic Treasury building on Murray Street, valued at an estimated $18 million as of 2015.
There was some disappointment at the lack of additional funds aimed at affordable housing. Homelessness is a key issues facing Tasmania, and while there is currently a large sum of money dedicated to fix it, there was hope more would come in this budget.
Health was one of the biggest winners, with millions of dollars pledged for hospital upgrades and relocations.
Also in the budget were 12-month stamp duty concessions for first home buyers and down-sizing pensioners, and temporary land tax exemptions for new long-term rental housing – but the costs for these initiatives weren’t laid out in the paperwork which caused some confusion.
It was a celebrated win for property experts in the ACT, with the state budget abolishing stamp duty for first home buyers, with a view to end the scheme for all home buyers long-term.
In exchange the budget announced an end to First Home Owner Grant payments, with Chief Minister Andrew Barr saying these had an ‘inflationary’ effect on house prices.
The new scheme waives stamp duty for any first-home buyers with a household income below $160,000 — regardless of whether they are buying a new or established home.
Replacing stamp duty, unit owners will face a 10 per cent increase as a result of the Government’s land tax scheme and revised method of assessing unit rates. This is down from the initially suggested 15 per cent. House owners see a 7 per cent rise.
The budget is the first to deliver a surplus for the state since 2011, and the lack of FHOG was the biggest loss, other than increases to fines and licensing.
There were also education and hospital expansion plans, and although the $1.9 billion light rail project has been scrapped, $350 million has been pledged for various unnamed social projects.
In the Northern Territory a derelict and vacant property levy will start from July 1, 2019 at a rate of one per cent for buildings with 50 per cent vacancy rate or more, and two per cent on undeveloped land. There has not been an introduction of a land tax.
According to budget papers, the ‘softness’ in population and employment growth means there’s unlikely to be strong demand for housing – equating to affordable housing and rental prices.
Housing received a big boost, with the public housing block at John Stokes Square in Nightcliff to be redeveloped, to include at least 75 public housing units as well as potentially private tenants. On top of this there is an additional $61 million pledged for new and upgraded urban public housing.
The overall air of the budget was a low one however, with a $1.2 billion deficit incurred for 2018-19 and a net debt blow out of $7.5 billion by the end of the forward estimates.
In response to this cuts were made to the public sector wages policy, dropping it from 2.5 per cent to 2 per cent. The government said that the only way for the budget to be balanced would involve a closing of schools and hospitals across the Territory.
In a bid to boost population and interest from interstate workers royalty deductions will be put in place for the cost of buying, renting or building accommodation for employees who live in the Territory, and for the cost of building infrastructure that provides economic or social benefits to Territory communities near to or affected by a mine’s operations.