The decision by the Federal Government to extend the First Home Buyers bonus for an additional three months in full, plus another three months in part, has had a mixed reception in real estate circles.
Those who sell property under the $500,000 have endorsed the decision.
I’m less enthusiastic.
That’s because I think the Home Buyers Bonus is a bit of a “band aid” solution that has really only aided the bottom end of the market; those of us who sell to “middle Australia” as well as the top end, have been exposed to open market forces, just like the stock market.
Now I don’t think we will see any great falls from here, with the 25-30% drop about as far as I think it will go.
But some stimulation would certainly help.
For me, a far better solution that would really help the top end of the market would be for the State Government to reduce Stamp Duty.
Now I should point out that Stamp Duty has a new name, Transfer Duty.
The reason?
The Government realised that charging someone $25,000, $30,000 – even $50,000 (approx duty on a property of $1 million) for “stamping a document” was unpalatable – even for those who could afford it.
The name “Transfer Duty” is designed to murky the waters just that bit more so as to ward off criticism.
Now, make no mistake…
Buyers to a tee hate this tax.
But even so, relief from this “Duty” seems unlikely.
That’s because according to RP Data, State and local government collected a combined total of $31 billion in property taxes in the last financial year - 39.4% of ALL taxes collected.
And given that for the most part, it is only a small segment of the population, potential homebuyers, who are affected by Stamp Duty and any one time, the governments have nothing to lose by NOT reducing them.
Because the public outcry, if any, is representative of the vocal minority rather than the silent majority.
Which the Government can live with…
Without fear of any electoral consequences.