A door opens for housing affordability

Date: 18 Jun 22

Opinion Piece by Quentin Kilian, REIV CEO
Published in Herald Sun on 18 June 2022 as "Duty to act on home ownership"

For the first time in a long time, the taxes that apply to real estate market transactions in Victoria could be set for a welcome overhaul.

Hope rests on a mid-July forum attended by state and federal treasurers that is expected to put genuine focus on property sector tax reform.

With housing affordability reaching crisis levels, and a confluence of other economic events, such as interest rate rises and cost of living pressures, it would seem the argument for a shift in property taxation policy has become exceedingly obvious as a common-sense move.

The headline act in the call for tax change is stamp duty. Quite rightly, it’s widely criticised as an ineffective tax that does more harm than good.

Stamp duty is a big deterrent to property market entry and movement for hundreds of thousands of Victorians. It thwarts homeownership dreams for many young people and impedes often very necessary changes in living arrangements for older Victorians.

The State Government has long benefited from taxes on property, netting up to $14 billion annually – nearly half of all government revenue. Despite this windfall, very little of it re-enters the property sector, not via investment in more social housing, nor through contribution to initiatives that could help create a more stable and sustainable property market.

It’s often been thought that state tax reform would only be considered if federal support was on offer. To that end, REIV welcomed reports that new Federal Treasurer Jim Chalmers was open to tackling the housing affordability crisis in collaboration with the states. He quite rightly noted it was time for a national discussion given the challenges are affecting all jurisdictions.

As the representative body for real estate businesses and individual members in Victoria, REIV is looking to seize this imminent opportunity.

Over the coming weeks, REIV is bringing together a group of property sector leaders to discuss and possibly unite on a preferred way forward on behalf of all property market participants in Victoria.

Victorian Treasurer Tim Pallas has indicated an appetite to work with the Federal Government to drive productivity improvements but has stopped short of committing to any change to the tax system.

With the state election less than five months away, it will be interesting to see whether our political leaders decide to step out and be proactive in addressing the housing affordability crisis.

Or will they again shut the door on the compelling arguments before them and continue to take from one of the state’s strongest sectors.

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