With the election cycle in full swing, state governments are making significant moves to address housing affordability—a pressing issue affecting many Australians. There are several creative measures being implemented to tackle this challenge head-on.
Affordability Through Supply
One of the biggest challenges around housing affordability is supply—there simply isn’t enough construction happening. Whether it’s detached homes or unit developments, the number of new constructions is insufficient to meet demand. This shortage is a major topic of discussion at the summit.
Creative Measures by State Governments
State governments are stepping up with innovative strategies to address the core issue of housing supply. Let’s take a look at what some states are doing.
Queensland: Increased First Homeowner Stamp Duty Concessions
In Queensland, the government has revised the concessions for first homeowner stamp duty. Previously, if you bought a property worth up to $500,000, you paid no stamp duty. This limit has now been increased to $700,000. Additionally, for land purchases, the threshold has been raised from $250,000 to $350,000.
This move is expected to put even more pressure on property prices at the affordable end of the market. For first-time homebuyers in Queensland, it’s crucial to act swiftly as these changes could lead to price increases in this segment.
South Australia: Abolishing Stamp Duty for New Builds
South Australia has taken a bold step by abolishing stamp duty for eligible first homebuyers purchasing a new build or undertaking a self-build. This policy applies to properties within the $10 million range, aiming to encourage new constructions and ease the supply constraints in the market.
The elimination of stamp duty is a significant incentive for first-time buyers and is expected to stimulate the construction of new homes, helping to address the supply shortage.
The Election Cycle
In the context of the election cycle, Australian state governments often monitor the policies and financial adjustments made by their counterparts in other states. This “watching over the fence” approach allows states to learn from each other’s successes and failures, particularly regarding tax policies and housing affordability measures. While QLD and SA are taking the first steps, it’s highly likely others will be soon to follow from their lead.
Upcoming Tax Cuts
In addition to the state measures addressing housing supply, the federal government has announced changes to individual income tax rates and thresholds effective from 1 July 2024. These changes will provide significant financial relief to many Australians, further aiding potential home buyers.
The proposed tax cuts include reducing the 19 per cent tax rate to 16 per cent and the 32.5 per cent tax rate to 30 per cent. Moreover, the threshold above which the 37 per cent tax rate applies will increase from $120,000 to $135,000, and the threshold for the 45 per cent tax rate will rise from $180,000 to $190,000.
These adjustments mean that individuals will retain more of their income, increasing their disposable funds. For home buyers, this translates to a greater ability to save for deposits and manage mortgage repayments, making home ownership more attainable. The tax cuts provide additional financial cushioning, helping buyers better navigate the housing market, especially in light of the ongoing pressures on housing affordability.
What This Means for You
The state and federal government’s efforts to tackle housing affordability are promising, but they also bring challenges. The measures aimed at helping first-time homebuyers could lead to increased pressure on sensitive price points. For those looking to enter the market, the message is clear: take action now.
The governments’ initiatives are a step in the right direction, but the impact on the housing market, particularly at the affordable end, will be significant. Staying informed and proactive is crucial for those navigating these changes.
