The president of a real estate industry body has warned of the unintended consequences of “tinkering” with “easy fix” property taxes, calling for a more “holistic approach” and the appointment of a new minister for property services.
Welcoming recent economic modelling commissioned by Master Builders Australia, the president of the Real Estate Institute of Australia (REIA), Malcolm Gunning, has outlined the property sector’s significant contribution to growth in the Australian economy.
“Australia’s property industry, including new home building, has been a crucial support to economic growth and increased employment in the transition away from a decade-long reliance on mining,” Mr Gunning said.
Noting that the property sector is one of the largest sectors in the Australian economy in terms of employment, GDP and investment, the REIA president added that it is also “one of the most heavily taxed sectors”, with research by the Housing Industry Association (HIA) showing that the average “tax burden” on the new housing sector is around 30 per cent of its value.
As such, the REIA president has called for more tax reductions and a renewed focus on the property sector via the appointment of a dedicated property minister, as published previously.
“If we are serious about addressing housing affordability, we need to take a holistic approach by looking at all taxes and charges impacting on the final cost of housing,” the president said.
“We cannot just tinker with one or two that are ‘easy fixes’ without fully considering the consequences.”
Mr Gunning added that the government should be considering solutions on the supply side, including a streamlined planning process and cutting back on additional taxation for home buyers, such as stamp duty.
In order to spearhead these changes, Mr Gunning advocated for the appointment of a dedicated minister for property services.
“The minister for property services can take leadership in addressing housing affordability by coordinating a holistic approach of all levels of government in objectively addressing all property taxes,” Mr Gunning suggested.
“For example, research shows that abolishing stamp duties and replacing them with land tax not only has a greater impact on affordability than changes to negative gearing and capital gains tax, but improves economic growth.
“It is only then that a strategy can be formulated that pulls the right levers.”
Mr Gunning added that improving public transport infrastructure to employment hubs should also be considered, as he predicted that this would encourage decentralisation and move more people to suburban and regional areas.