Zed calls for an X to be put through stamp duty

I doubt people will say “we really love the $520K place, but we’ll take the $490 place to save stamp duty’, especially if they keep getting outbid by people who don’t care about the saving.

Which is why the market rises – because emotional home buyers can often stretch that little bit futher…

> A 490k house today will be a 490k house tomorrow

Only in the same way a 490k was a 490k house 5 years ago. In a competive market such as we are in, the fact buyers (and there will more of these too, compounding the problem) have extra money to spend will simply result in increase housing costs. And in turn more expensive houses will be affected.

A nice vote winner, apart from the fact it demonstrates a rather inept grasp of basic economic principles.

SCV6 – do you include the cost of stamp duty in the total amount loaned these days? I know I used my first home buyers grant to pay the stamp duty (back in the days when it would cover the stamp duty!) as it wasn’t covered in the loan. ie loan was for purchase price of the home less the 5% deposit plus mortgage insurance….. I had to come up with the stamp duty myself and therefore the first home buyers grant helped greatly….

If we are going to scrap the stamp duty surely this will help get into the market? A 490k house today will be a 490k house tomorrow…won’t it?

The only thing to consider with any loan is cash flow (what you can afford to pay each month). $15K for stamp duty over 30 years is roughly 100 bucks a month. whilst people may balk at the extra 15K, the realisation that its only about 100 bucks a month will mean they won’t care. If they really are that worried about 100 bucks a month extra then perhaps they should reconsider a purchase in that price bracket in the first place..

What about the larger underlying problems? Nobody has any solutions, or is even talking about the real cause of the actual problem here?
Lets just toss some bandaids at it and the problem will go away.

I’m not sure that house prices will go up.

On the one hand, sellers will see that buyers now have an extra $stampduty in their pocket and so can get a mortgage worth an extra $(stampduty / 0.05 to 0.2); no different than when First Homeowners Grant came in and house prices went up $35,000 for no reason at all.

On the other hand, the median Canberra house price is already in the high $400Ks anyway. There’s also still strong demand and limited supply. I doubt people will say “we really love the $520K place, but we’ll take the $490 place to save stamp duty’, especially if they keep getting outbid by people who don’t care about the saving.

On my surprising and slightly disturbing third hand, median house prices in Canberra just fell 6.8% in the March quarter, from $477K to $445K – just in time for something like getting rid of stamp duty to push prices back up again and back to ‘on the other hand’.

Could help somebody selling a unit, I guess.

beasely; stamp duty is a fairly good, (well ‘less bad’,) thing to tax as both sides of the market are fairly inelastic and well to put it bluntly govt. money has to come from somewhere; the problem with a consumption tax like the one you suggest is that a.) it would be inequitable for those on lower incomes and b.) if the ACT had a consumption tax that no-one else did then i’d do my shopping in queenbeyan, same as everybody else.

enny; prices are high because of high demand for housing, say you are competeing with me to buy a 450 grand house with 15 grand stamp duty; total cost of 465 grand. Then say the stamp duty disapeers, you (being very smart) offer 455 grand to out bid me leaving you 10 grand better of, i then offer 460 grand leaving me 5 grand better off, you offer 462, i offer 463 and so on until we get back to 465 leaving us both no better off and the govt 15 grand in the hole.
this plan would work if supply was large enough that sellers, not buyers were competing against each other; patently not the case in canberra. Stanhopes plan regarding land renting, aimed at extending the supply of houses, will help first home buyers, zeds plan wont.

I’m all for it.

Sales are down and I imagine the crazy prices have something to do with it – if people are adding the $15,000 (approx) to their property price, sales will continue to stay low.

Hopefully it will help first home buyers (like me!).

While I take the point that it won’t do anything to address the fundamental supply issues in the market at the moment, it might go some way to levelling the field for young people looking to get out of the rental game and into their first home.

How? As you already agreed it demand that’s setting the price not stamp duty, any change in duty will just get eaten up by the vendor. That’s what the first home owners grant did.

As I’m sure we’ve all heard many times, stamp duty was supposed to be given the axe when the GST came in. And as someone who’s been looking at around at the market for first homes, I can sure tell ya that the prospect of coughing up an extra 20 grand on top of the already painful asking price is not a pleasant one.

Bear in mind that it’s not only first home buyers looking to invest in the sub-500K market. I’m sure there are plenty of investors and their tax breaks looking for rental properties in that area too.

While I take the point that it won’t do anything to address the fundamental supply issues in the market at the moment, it might go some way to levelling the field for young people looking to get out of the rental game and into their first home.