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The 2022-23 Victorian state budget promises some improvements and additions for the state’s real estate sector but still lacks necessary tax reforms, according to the institute.
The Real Estate Institute of Victoria (REIV) believes the budget has reinforced the real estate industry’s economic strength; however, the institute has called for the government to embrace and implement better tax policy in the sector.
As part of the 2022-23 budget, the Victorian government has launched a string of initiatives that REIV chief executive Quentin Kilian welcomes, citing their ability to further strengthen the sector.
The Victorian government has indicated it will work with the community housing sector to make $1 billion in low-interest loans and government guarantees for community housing agencies available to deliver social and affordable housing to more Victorians, while also planning to continue the state’s $500 million Homebuyer Fund, first launched in October 2021.
While noting the significance and importance of these policies, Mr Kilian is adamant the Andrews government has missed out on an opportunity to deliver needed property tax reform.
“Since last year’s budget forecast a further $3.3 billion in property tax revenue has been raised, underlining how significant a contributor the real estate sector is to the state’s coffers,” Mr Killian stated.
“Stamp duty is a tired tax that the Victorian government continues to prioritise – the state needs a review of its old property tax regime so that all participants – first homebuyers, owner-occupiers, investors and renters – can move forward with confidence.”
REIV’s calls for stamp duty reform come at a time where house prices in Victoria are expected to decline by 4 per cent this year, leading to expectations that stamp duty revenue will also fall; To $8.23 billion this year, from $10.20 billion recorded last financial year, before gradually trending upward in the years that follow.
A recent report by the Housing Industry Association (HIA) found that Victorians pay the highest stamp duty fees of any state in the country, with Victorian home buyers paying, on average, $40,370, or 5 per cent of the median home value in stamp duty. The HIA report listed the high rate of stamp duty in Victoria as presenting a significant roadblock to residents entering the housing market.
Looking ahead, Mr Kilian said that “political, business and community leaders should ensure there’s a focus on keeping Victoria an attractive destination for property investment and housing affordability and access”.
“Anything less puts at risk our strong foundation, which will harm job creation and the economy more broadly,” he said.
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