In preparation for the forthcoming release of the Victorian Government's 2011-12 Budget, the Real Estate Institute of Victoria has presented its submission to the Government, which calls for a reduction in property taxes, increased assistance for first home buyers and improvements to land tax.
The REIV states that Victorian residential property taxes are higher than they have ever been before, and are higher than in every other state around the country. Victorian property buyers pay the largest amount of stamp duty, property investors can face double taxation and businesses investing in property leave themselves open to being charged stamp duty on the GST they must pay – essentially paying tax on tax.
According to the REIV's submission for the 2011-12 State Budget, its key priorities are:
• Provide first home buyers with a discount on stamp duty;
• Increase the supply of housing to ease cost pressures on owner-occupiers and renters;
• Provide first home buyers with up to $2,000 for use on professional services and incidental expenses incurred in a residential property purchase;
• Cut the stamp duty rate and implement indexation;
• Cease charging stamp duty on GST;
• Assist the rental market by ceasing opportunistic property taxes on investors;
• Ensure land tax rates are competitive and promote investment in Victoria.
The REIV's submission comes at a pivotal time for the residential housing market in Victoria. According to the REIV's quarterly figures for March, the Melbourne median house price has dropped by six per cent from the December quarter. REIV CEO Enzo Raimondo has said that the Melbourne and Victorian residential markets have entered a phase of lower transaction numbers and reduced price growth, mainly due to affordability constraints and recent interest rate increases.
The REIV's recently released Housing Affordability Report has shown that Victoria is the second-most expensive state in Australia in which to afford a home. According to the REIV, such reduced affordability in the state can be seen in the significantly reduced number of home loans that have recently been taken out, as well as a decline in general market activity. As with some other states around Australia, Victoria is suffering from a declining first home buyer market, which can be attributed in part to such reduced housing affordability.
It will be interesting to see how the Victorian Government incorporates the REIV's priorities into its 2011-12 Budget. It was clear in the recent New South Wales election that residential housing is an issue that is of great importance to voters – clearly this is also the case in Victoria. I hope that the Government takes the submission seriously, and acknowledges that making the purchase of housing more achievable for residents should provide benefit to the state itself.