REIV CEO said that due to the healthy economy and growing population, housing affordability was under extreme pressure and steps need to be taken to help buyers and renters.
Director and CEO of The Barry Plant Group, Mike McCarthy backed Mr Raimondo’s comments by stating that with the right policies, the state government can improve housing affordability, particularly for first home buyers.
The Real Estate Institute of Victoria reports that Victorian home buyers are paying more in stamp duty than ever before. Ten years ago stamp duty on a median-priced house was $9,760, or 4.15 per cent of the purchase price – now its $28,970 or 5.13 per cent of the purchase price.
“Last financial year the state government exceeded budgeted income by $408M and due to the strength of the market they look likely to exceed this year’s budget as well. The extra income received from home buyers last financial year would cover the cost, over four years, of the cuts to stamp duty made in 2007” Mr Raimondo said.
“If stamp duty were charged on the same rates it was 10 years ago, the buyer of a median-priced home would save over $5,000 – money that could be spent on a range of other items necessary to set up a new home.”
The second issue is that first home buyers are worse off than they were a decade ago. When the $7000 grant was introduced in 2000 the median price of a house was less than half what it is now.
While the grant has not increased, stamp duty has. As it stands, the first home buyer grant is simply a small down-payment on the stamp duty bill.
The state government has a policy of helping new home buyers with very generous grants but that has not stopped the number of first home buyers dropping by 45 per cent over the last year. First home buyers are clearly struggling with increases in the cost of housing and deserve relief.
“It is also necessary to increase the supply of housing to ease cost pressures on owner–occupiers and renters. Melbourne has an under supply of housing and only by increasing house construction can that be addressed,”