Could stamp duty incentives for downsizers result in more properties coming onto the market, and make apartment developments Ku-ring-gai even more lucrative?
Since Gladys Berejikilian was sworn in as the New South Wales Premier, there have been whispers of a potential cut in stamp duty for retirees, in a bid to let downsizers ease Sydney’s housing shortage.
“I am very open to looking at potential tax changes to improve housing affordability,” Berejiklian told Sky News on February 19.
Steep stamp duty fees could discourage downsizers
Berejiklian’s comments were welcomed by the Real Estate Institute of New South Wales’ (REINSW) President John Cunningham as steep stamp duty fees often discourage empty-nesters from downsizing.
“Buyers are now forking out over four per cent of the value of a property on stamp duty and this is stopping the supply of established homes flowing into the market,” he said.
Real estate agent Angus Raine called for stamp duty breaks earlier this year, framing a dire predicament for many retired Australians. “Stamp duty eats into the retirement nest-eggs of many older Australians, especially those who have very little in the way of superannuation savings, because the majority of their working careers were completed prior to the introduction of compulsory superannuation in the early 1990s,” he said.
Could lowering stamp duty help housing affordability?
In February, the Western Australian government provided incentive for seniors to downsize with a stamp duty concession of up to $15,000 for new and established homes up to the value of $750,000.
The NSW Executive Director of Property Council Australia, Jane Fitzgerald, is urging NSW to make a similar move. “If the NSW stopped its reliance on stamp duty and instead looked at other ways to raise revenue, then house prices would come down and affordability would improve.”
How stamp duty incentives for downsizers could affect Ku-Ring-Gai
For seniors the lifestyle benefits to downsizing are obvious, with less to look after, their capacity to live independently for longer increases. Then there are the reduced costs: lower repair costs and electricity bills, which all add up when you are no longer in the workforce.
But according to experts the real benefits would be to the real estate market where a change like this could be the key to unlocking some of the tightly-held family homes in Sydney’s North Shore.
Researchers have found that in Ku-Ring-Gai more than 70 per cent of residents who were older than 65 had two spare bedrooms, or more, in their home.
“By providing stamp duty incentives to older Australians to downsize we will see many more properties coming onto the market,” REINSW’s Cunningham said.
“There would be a chain reaction. One transaction can set off a chain reaction that leads to 10 sales. If we get the supply of existing properties flowing then the price pressure will be eased.”
And, if the NSW Government were to follow Western Australia’s lead, this would make apartment developments Ku-ring-gai even more lucrative.