Following the Victorian government’s announcement of its plan to combat rising unaffordability, CoreLogic head of research Cameron Kusher told Nestegg that NSW would be wise to follow suit.
“Obviously Sydney’s housing affordability is an even bigger issue than it is in Melbourne,” Mr Kusher said.
“We know the new Premier in NSW has got Glenn Stevens on board to look at housing affordability and they can look at what Victoria and other states and what's been done around the world and come up with some ways to make housing in Sydney and New South Wales more affordable overall,” he explained.
However, NSW Premier Gladys Berejiklian should take Victoria’s measures as a cautionary tale as much as an example, Mr Kusher warned.
Chief among those measures is the announcement that stamp duty will be scrapped in Victoria from July for first home buyers purchasing property under $600,000.
“I think stamp duty is a terrible tax and I think it's something we should be looking to scrap, but only scrapping it for part of the market is not going to make all that much difference,” Mr Kusher said.
While Victorian Premier Daniel Andrews touted the policy as helping 25,000 first home buyers get into the market, Mr Kusher argued that the savings on stamp duty will likely just be redirected to paying for the property itself, raising prices instead.
“Someone selling knows first home buyers are going to have more buying power so it has the potential to push prices up because someone might be willing to pay $580,000 for a house worth $550,000 because they now don't have to pay that stamp duty,” he explained.
The Victorian government also announced it would introduce a 1 per cent tax on vacant properties in the inner and middle suburbs of Melbourne.
“I personally don’t think a 1 per cent tax is that much of a deterrent for these people leaving their properties vacant, so it should be higher to be effective,” Mr Kusher said.
“Some people might be encouraged to put it into the rental market but for foreign buyers just looking to purchase an asset and leave it sitting in Australia, I don't think it’s going to encourage them to bring that property into the rental market,” he explained.
The third announcement made was Victoria’s plans to introduce a pilot program where the government would take co-ownership of property with first home buyers.
The program would see the government pour $50 million into the purchase of up to 400 homes for first home buyers, retaining a 25 per cent stake and reducing the size of the deposit required.
“Obviously where housing is becoming less affordable we need to look at new ways of letting people who don't own a home access to the market, and this could potentially be a good policy,” Mr Kusher said.
All three policies come as the Victorian government pushes affordability as a key policy issue.
Just last week they announced the creation of 17 new Melbourne suburbs for rezoning and development to help bring on the supply required to sate growing demand.
While demand has outpaced supply in both NSW and Victoria, simply increasing supply is not enough unless governments correctly plan around new developments, Mr Kusher said.
“It's great to have more supply but you need to actually have the facilities to make these areas more appealing. If it creates more pressure on roads and rail then it's not necessarily a great thing, so you need to make these places desirable not just in terms of the fact that they're cheap.”