REIA calls for action on affordable housing and stamp duty in the budget.
Housing affordability and taxation as it relates to property are the focus of the Real Estate Institute of Australia's Pre Budget submission to Government. The submission notes that as Australia’s economy transitions from resource investment growth to other drivers of growth and economic activity, dwelling investment has been a significant contributor to Australia’s economic growth.
Providing a stimulus to economic activity outside the mining sector, including the housing and building sectors, was amongst the main reasons for the RBA to keep the official cash rate at record low levels since August 2013.
"Whilst the building sector has been a strong contributor to economic growth, this has been at the cost of first home buyers with the number of first home buyer commitments as a percentage of total owner occupied housing finance commitments falling to 14.9 per cent in November and is the lowest since June 2004," said REIA President Neville Sanders. "Since April 2012, the numbers of home loans issued to home buyers increased by 25 percent while the participation of first home buyers declined by 17 percent. This decline is despite seven cuts in the official interest rate over that period.
"This is why we are asking the Federal Government take a leadership role in urging all states and territories to take the same approach to the provision of assistance to first home buyers regardless of whether the dwelling is new or established as well as allowing first home buyers access to their superannuation for the purchase of a home," said Sanders.
"We are also asking that the Federal Government take a leadership role in abolishing state-based stamp duties as analysis shows that economic activity in Australia can be lifted by just shifting the composition of taxes from high economic cost State taxes to Australia-wide taxes."
The REIA is also urging the Government to retain negative gearing and capital gains tax in its current form for the purpose of property investment as the current taxation arrangements provide many Australians with the opportunity to invest in property and augment their savings in particular their retirement savings and at the same time improve rental affordability through an increased supply of rental housing.
"Negative gearing is not a special concession for property, it is a legitimate deduction of expenses in the course of earning income from investments in all asset classes until the investment generates a positive income stream in the future," said Sanders. "Limiting negative gearing to a maximum number of properties per taxpayer – as has been suggested by many commentators - would be simply bad policy as it would encourage inefficient capital allocation by investors. For example if the limit was set at two properties someone with three investment properties would shift capital amongst loans for their properties to ensure that only two of them are negatively geared, with the third one positively geared and total gearing and tax deducibility unchanged."