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The donut city looms as NSW slashes stamp duty

By 9 June 2010 11

The Canberra Times has a piece on the fallout of yesterday’s NSW Budget (note how NSW cleverly wait until after they’ve seen the Federales).

The big thing for us is that in NSW houses under $600,000 will be exempt from stamp duty. This in turn will allow developments in the surrounding Canberra region to be priced more competitively, taking demand out of the ACT market and putting more pressure on the Federal Highway and Canberra Avenue.

Mr Stanhope ruled out matching the proposal, claiming significant measures already existed to provide affordable housing.

He described the NSW measure as a stamp duty holiday, with greater need across the border to address a more apparent housing shortage.

It was a holiday he said the ACT could not afford.

I’m not sure we can afford to be so uncompetitive either.

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11 Responses to The donut city looms as NSW slashes stamp duty
#1
DeadlySchnauzer10:09 am, 09 Jun 10

I don’t think this will make much difference. Houses in the NSW “donut ring” are already substantially cheaper than buying closer in to canberra. If price was the primary driving factor then we would have already seen this demand change happen.

But of course in real estate there are a huge number of other factors other than just price… like having to drive for an hour to work and back each day.

#2
toriness10:52 am, 09 Jun 10

hmm maybe a short term impact but won’t this just mean NSW house prices will bump up the stamp duty saving differential as people go ‘yippee that money i was saving for stamp duty now i can spend on outbidding other buyers’ – similar to the effect of the FHOG?

#3
Clown Killer11:21 am, 09 Jun 10

But of course in real estate there are a huge number of other factors other than just price…

Three in fact – location, location and I think the third one was … location.

#4
Gungahlin Al12:05 pm, 09 Jun 10

Easiest way to slash your stamp duty on a new home in ACT is to buy the land only, then get a builder to build the house. When you buy a house and land package, you pay stamp duty on the entire amount. I’d rather pay it on $200,000 instead of $600,000 any day.

Plus, you get to design the house how you want it too, rather than what some builder reckons they can flog off quickly, and bugger the design.

#5
The cat did it12:28 pm, 09 Jun 10

Stanhope actually gave quite a lucid explanation on ABC666 last night- pointed out how NSW and ACT housing supply situations differed, and that the stamp duty measure was 1- a two year measure, and not ongoing, and 2- part of a package of measures to boost housing supply in NSW, which is seriously lagging demand. In any case, the few thousand dollars you may save by buying in NSW would soon be eroded by the ongoing cost (money and time) of additional travel.

And anyone who doesn’t think that builders wouldn’t try to lift their prices by the amount of the stamp duty saving may be interested in this bridge I have for sale …

#6
georgesgenitals12:28 pm, 09 Jun 10

DeadlySchnauzer said :

I don’t think this will make much difference. Houses in the NSW “donut ring” are already substantially cheaper than buying closer in to canberra. If price was the primary driving factor then we would have already seen this demand change happen.

But of course in real estate there are a huge number of other factors other than just price… like having to drive for an hour to work and back each day.

Depends where you mean. Parts of Queanbeyan are similarly priced to much of Canberra, and have a shorter commute time too.

#7
djk1:02 pm, 09 Jun 10

“The big thing for us is that in NSW houses under $600,000 will be exempt from stamp duty.”

Just to clarify – it is only vacant land and new off-the-plan houses under $600k that are exempt, not all NSW houses under $600k.

#8
Mathman1:33 pm, 09 Jun 10

djk said :

“The big thing for us is that in NSW houses under $600,000 will be exempt from stamp duty.”

Just to clarify – it is only vacant land and new off-the-plan houses under $600k that are exempt, not all NSW houses under $600k.

Which is why it will be nothing more than a windfall profit to developers. People want to buy a house irrespective of it being new or old. Making new houses cheaper increases the demand for them which encourages developers to charge more until they are price comparable to old homes.

#9
Ivan764:42 pm, 09 Jun 10

“Mr Stanhope ruled out matching the proposal, claiming significant measures already existed to provide affordable housing.”

Funny, when I bought my townhouse for $245,000k less than 4 years ago I thought I was on the brink of affordable housing.

Now that same townhouse is worth 360,000k & I would not have stood a chance in getting finance for that amount back then which leads me to conclude that the amount of people now ineligible to buy an entry level dwelling such as my humble little townhouse would have greatly increased.

I consider myself extremely lucky to have secured my mortgage when I did.

I wonder exactly what “significant measures” Stanhope is talking about in reducing the cost of housing and how he justifies making statements like the one above.

#10
bd849:35 pm, 09 Jun 10

Stanhope has never understood the concept of affordable housing, only the concept of raking in as much money as possible then wasting it in the most inefficient way possible.

His idea of affordable housing is setting aside a few blocks of land in new developments at cheap prices, the rest of the blocks sell for $500k+ or releasing a bit more land which won’t be ready for occupation for more than 2 years. The existing stamp duty concessions are a joke, and fine if you are looking for a 1br apartment or tiny house, otherwise you’re stuck paying the full stamp duty rate because the market price for most houses is above the threshold.

I don’t think Canberrans will notice either way, people seem to be used to the inadequacies of Stanhope and his policies.

#11
7captains9:15 pm, 16 Jun 10

DeadlySchnauzer said :

“I don’t think this will make much difference. Houses in the NSW “donut ring” are already substantially cheaper than buying closer in to canberra. If price was the primary driving factor then we would have already seen this demand change happen.”

“But of course in real estate there are a huge number of other factors other than just price… like having to drive for an hour to work and back each day.

mmh, we moved from renting in ainslie for so many years to buying our first PPOR over the border in queanbeyan. Paid $300k less than the average ex-govie monocrete and much closer to work (we both work in barton)…we’re saving on petrol and those extra 6 minutes of time too…and we put the $20k we saved on stamp duty straight on to the mortgage for our established home…not paying stamp duty on our established home was definately a deciding factor for us. And we’re much closer to work than when we were in Ainslie. And we still go to Edgars- well not at the moment seeing it’s closed. Broadburger is closer too. You get my point.

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