Residential property, especially new housing stock is over-taxed. If we’re to lift new housing starts, Matusik says we must:
- Increase the speed of population growth.
- Increase the supply of raw land across urban Australia
- Reduce approval times and unnecessary compliance red tape
- Allow the market to dictate demand
- Have new property valuations based on rental returns, not market comparisons
- Reduce taxation on property (HIA research shows this is up to 40% of a new home’s final price)
- Remove GST on new construction
- Remove stamp duty from off-the-plan sale.
However, the biggest problem affecting demand is the current oversupply of property for sale. Buyers are simply spoilt for choice and too many vendors are unrealistic in their expectations.
Healthy supply levels run at about 200,000 homes for sale at any given time. Australia currently has 400,000. Even a 1% or 2% drop in interest rates is unlikely to make an impact on their salebility, unless it is combined with sharp market pricing and aggressive marketing.