Page 1995 - Week 06 - Wednesday, 25 June 2008
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by other places around Australia. There has been a major study published by Westpac. Also, have the Liberal Party read the latest Peter Martin article on housing affordability? I bet they stopped reading when they got to this point in that particular article. With respect to pursuing land rent schemes in New Zealand, I wonder if they got onto their websites to pursue Westpac’s analysis of the implications of stamp duty exemptions, un-means-tested and uncontrolled, that have applied around Australia and, indeed, in other places in the world.
What does Westpac say? Last Friday, Westpac published its analysis of the effect of the latest round of extra stamp duty tax concessions in the states, which found that, combined, they would force up national house prices by at least an extra per cent; indeed, in Queensland, it had pushed up house prices by two per cent. Let us go to the median house price, which currently is in the order of $450,000. Westpac found that this stamp duty exemption scheme embraced by the Liberal Party here, and indeed by others, would immediately and automatically push up the price around Australia in the first instance by at least one per cent—$4½ thousand. In Queensland, which was the most relevant example—I think it was the longest established—the figure was two per cent, or $9,000. So your $450,000 house, immediately and automatically, under these schemes, jumps to $459,000.
How quickly does it do that? Westpac found that the original first homebuyer became priced in, after the stamp duty exemption, within six months. Westpac found that the stamp duty concession regime introduced in Western Australia became priced in within three months. So with respect to the stamp duty exemptions that have been provided under these schemes, within three months in Western Australia—the most relevant experience—they are priced in. A stamp duty exemption is lovely; who is going to say no to a tax break? Which politician or political party is going to resist the urge of simple politics: “Give them a break.” “Oh yes, I’ll take that”?
The second round of applicants for the stamp duty exemption pay an extra $9,000 within three months. So you get your first band of stamp duty exemption and houses go up immediately by one per cent—on some suggestions it is two per cent—and it is priced in within three to six months. The most recent economic analysis of the implications, effect and consequence of this un-means-tested, open-slather stamp duty exemption for first homebuyers is to have it priced in with higher prices within three months, in the case of Western Australia, and, they believe, inevitably within six months. In other words, you have done your dash within six months.
It is great politics; none of us deny that. It is great, simplistic, shallow politics with appalling policy outcomes. It is appalling policy with appalling policy outcomes—voodoo economics at its worst. The Liberal Party’s one and only housing affordability initiative, in the view of Westpac, in the most recent and perhaps only real analysis of the implications of stamp duty exemptions that are un-means-tested and uncontrolled, for first homebuyers, is that they push up house prices by between one and two per cent and the effect of the stamp duty exemption becomes priced in within three months. Peter Martin’s article—and my view and impression of the Canberra Times goes up daily—stated:
The ACT stood alone with NSW in not widening stamp duty concessions in its last budget (except for an innovative and temporary concession for pensioners wanting to downsize).
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