Home truths needed on housing debate

Home truths needed on housing debate

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Enter housing price growth into the topic although make sure if you want to be right that you always select the plural. For example, those in the real estate industry always focus on suburban or post code housing price growth. What we are reading now are housing price growth predictions of significant drops for Sydney and Melbourne which just so happen to be Australia’s largest and most active markets.

Allow me to put this into perspective given most have failed miserably in educating readers as to what exactly this means. Let’s say for the sake of this argument you own a house in Mosman – in six months’ time the value of your home will in all probability have gone up due to record low stock levels. However, if you had recently acquired an investment off – the – plan apartment, in six months’ time that would have definitely dropped well below the purchase price.

Recently we learnt that the Australian banks are no longer lending to foreign buyers and many areas across Sydney have now been black listed from obtaining any loans due to a significant oversupply of property. We need to bear in mind that whenever we see major price adjustments to real estate this can only happen when you have an acute oversupply.

The final nail in the housing investment market was delivered this week in the NSW budget when stamp duty payable by foreign buyers would be hit with a new four (4) per cent surcharge. On top of that they will also be hit with an additional 0.75 per cent land tax surcharge on residential real estate. If ever these tens of thousands of foreign buyers needed a reason to walk away from their deposits they certainly have one now.

BareIslandSYDNEY AERIAL PHOTOGRAPHY

To add further confusion to this potential housing catastrophe nobody can answer does this surcharge apply to those investors who have already paid their deposit and are yet to pay stamp duty? If history is anything to go by then you would say confidently that it does. The major lenders would be hoping that it does as they would be hoping that many of their new lending clients walk away from their deposits as that significantly reduces their exposure. Although this can be a double whammy if they are also funding the developer – so this is the double – edged property sword.

We should also clean up some incorrect speculation from commentators that this new surcharge will have a significant effect on home prices too. Well it won’t because these foreign buyers can only buy off – the – plan so it won’t play any part in the established housing markets.

One would have to say that the new surcharges will be a total failure although it is disappointing that the NSW government did absolutely no due diligence with what the long term effect would be on the housing markets other than to drive the investment real estate markets values down. The tax that should have been brought down was a tax against those investors who land bank because they would make plenty from that given a large percentage of foreign buyers leave these properties vacant.

The NSW government would be very concerned that stamp duty received from the established property markets is in significant decline although there is no mention of that as all the revenue has arrived thanks to a robust investment market, hence the new surcharge. Should the new surcharge tax turn out to be a dismal failure which I believe it will then the NSW government will be forced into hopefully a complete review of property taxes.

Everyone in the real estate industry knows full well that the reason for record low stock levels is entirely due to home owners baulking at paying exhorbitant stamp duty, so instead they are renovating. One day the NSW government will explore a broad based land tax paid annually by home owners as a logical replacement to stamp duty with Australian residents receiving a discounted rate.

One would think by now that policies on the run are usually always met with disaster where the last example was the failed and now abolished mining tax.

 

 

MOSMAN – 2088

 

Number of houses on the market this time last year – 55

 

Number of houses on the market last week – 51

 

Number of houses on the market this week – 48

 

Number of apartments on the market this time last year – 66

 

Number of apartments on the market last week – 41

 

Number of apartments on the market this week – 41

CREMORNE – 2090

 

Number of houses on the market this time last year – 13

 

Number of houses on the market last week – 10

 

Number of houses on the market this week – 13

 

Number of apartments on the market this time last year – 11

 

Number of apartments on the market last week – 18

 

Number of apartments on the market this week – 18

NEUTRAL BAY – 2089

 

Number of houses on the market this time last year – 3

 

Number of houses on the market last week – 8

 

Number of houses on the market this week – 7

 

Number of apartments on the market this time last year – 29

 

Number of apartments on the market last week – 19

 

Number of apartments on the market this week – 19

 

For this week’s sales in Cremorne real estate, Cremorne Point real estate, Mosman real estate, Beauty Point real estate, Clifton Gardens real estate, Balmoral real estate, Neutral Bay real estate, Cammeray real estate.

 

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For this week’s open for inspections

 

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Source: APM Price

 

4 Responses to “Home truths needed on housing debate”

  • Andrew says:

    Stamp duty is linked to house prices. House prices are absurd thus stamp duty is high.
    Bring on the correction.

  • Ann says:

    Hi Robert

    Great photo from Tim. There may be a correction, but not long terms, why would you live anywhere else.

  • Katherine says:

    hi there
    does this mean that if I’m a Aust Resident and want to purchase and off-the-plan apartment for an investment I should wait as they will go down?

    really appreciate your response as I’m confused as to wait or not?
    thank you.

  • rsimeon says:

    Katherine

    Many schools of thought on the best advice regarding waiting or buying. With all going on recently especially Brexit – we would suggest waiting and watching how many previously sold apartments come back on to the market. We are hearing there will be plenty.

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