REIV welcomes stamp duty cuts for first home buyers, pensioners

The REIV has welcomed cuts to stamp duty for first home buyers, eligible pensioners and farmers announced in the 2011–12 Victorian Budget.

REIV CEO Enzo Raimondo said that first home buyers, farmers and pensioners had been looking forward to the cuts since they were promised in last November’s election and they would no doubt welcome the announcement and details in the Budget.

“House prices have more than doubled since the First Home Owners Grant was introduced in 2000, yet for most buyers of a first home the financial assistance is still only $7,000. The cut, which will be worth around $5,794 on a home valued at $565,000, will begin to redress that imbalance.

“This additional $5,794 benefit, when added to the continuing grant of $7000, will lift overall assistance on an average home to around $12,794.

“Those buying a new home will also benefit, as the bonus of $13,000 in the metropolitan area and $19,500 in regional areas will continue and now be boosted by the stamp duty cuts.

“The REIV campaigned for increased assistance for first home buyers and we are happy that stamp duty now will be cut by 50 per cent between 1 July 2011 and 1 September 2014.

“Due to the ongoing reductions in affordability, the number of first home buyers is 35 per cent lower than it was a year ago.

“The move to increase the threshold at which eligible pensioners can gain a stamp duty concession to $750,000 is a good move, as it will help remove a prohibitive barrier to downsizing. This, in turn, will free up homes for first home buyers and the rental market.

“The commitment to help first home buying farmers will be welcomed in regional areas.

“The government has delivered on their commitment; now home buyers will hope to see broad-scale stamp duty reform in next year’s budget.  Stamp duty equated to around 3.3 per cent of the cost of a median-priced home 20 years ago, 4.5 per cent 10 years ago, and now it is around 5.1 per cent.

“Home buyers are funding an increasing portion of the state budget with this inefficient tax and it needs reform. At the very minimum, stamp duty rates should be indexed to house prices. If rates are not indexed, natural house price increases will reduce the real value of the 50 per cent cut over the 3.5 years it will take to deliver.

“Reform of stamp duty rates should be looked at in conjunction with the Henry Tax Review,” Mr Raimondo concluded.