There’s a lot of chatter about housing affordability at the moment and with the timely release of the RPData Core Logic housing affordability report which has provided us with some great insights into where things are going.
Mainly the national housing debate focuses on first home buyers and the growing deposit hurdle. Coupled with lower supply and climbing prices, this is of course a focal point and major issue worth addressing.
Realistically however the only way that the housing affordability issues is going to be addressed properly is if all levels of government, local, state and federal with the inclusion of the private sector work together to combat this complex issues. Until this happens and there is a collaborative coordination of policy and strategy along with infrastructure investments into areas where housing costs are much lower, we will see little change outside of a major market correction.
One of the issues out there in the market place is the empty-nesters and baby boomer generation who are halting the second home buyer markets across the board from state to state. Basically this is due to the fact that the costs for someone to downsize are too high and are prohibiting them from doing so.
Stamp-duty is easily one of the main issues facing those owners who would otherwise consider downsizing. The stamp duty eats into super and retirement savings especially of the boomers as compulsory superannuation was not made so until the 90’s thus there isn’t much in the way of savings of these people.
In South Australia a purchaser of $500,000 (slightly above the median) will incur $21,330 in stamp duty payable to the government. As you can see that’s a large chunk of change for anyone to past with given there is no prospect of ever getting it back.
If the state government reconsidered the stamp duty rates charged to particular demographics such as first home buyers, offering a concession or abolishing the tax all together for over 70’s, this would release some of the properties which are being held onto thus providing some relief to the current supply issue. Effectively it would free up the market.
It is time that state governments looked more seriously at these issue and took action to combat the growing issue.
*Sources – Rp Data, Revenue SA