NSW stamp duty forecasts suggests strong housing market recovery by 2014-15

NSW stamp duty revenues are forecast to rise by 22% over the next four years, while Victoria is forecasting a more modest 9% increase in earnings from land transfers, according to mid-year state budget updates.

The forecasts also highlight how dependent state governments are on property taxes, which account for around a third of their taxation revenue annually.

At the recent Canberra Tax Forum lobbying groups such as the Australian Housing and Research Institute called on the government to scrap stamp duties in favour of a broad-based land tax to improve housing affordability –  as suggested by the 2010 Henry Review.

Given how dependent state government are on property taxes, scrapping them is likely to be heavily resisted.

The NSW government earned $4.05 billion in stamp duty revenue in the 2010-11 financial year, with an additional $2.28 billion earning in land taxes.

Stamp duty revenue is forecast to dip next year falling to $3.65 billion as buyers and builders of new homes take advantage of concessions available in the NSW Home Builders Bonus scheme available up until July 1, 2012.

Revenue is forecast to increase over the next three years, earning the state $4.27 billion in 2012-13, $4.72 billion in 2013-14 and $5.16 billion in 2014-15.

In total property taxes (including land tax revenue) accounted for 31% of revenue earned by the state in 2010-11 a figure which will rise to 33% of revenue by 2014-15.

In its 2011-12 Half Yearly Review, the NSW government expects a recovery in dwelling investment to continue over the next two years, albeit at a more moderate pace than that seen in 2010-11.

“With solid construction activity in the September quarter and trend private dwelling approvals increasing moderately, the near-term outlook is slightly more positive than at budget time. This is despite softness in the broader housing market. Dwelling investment over the next two years is expected to be supported by low vacancy rates and rising rental prices, along with growth in population and household incomes,” the review says.

The Victorian government is forecasting stamp duty earnings of $3.76 billion in 2011-12 with a modest rise to $3.78 billion in 2012-13 before accelerating to $3.94 billion in 2013-14 and reaching $4.12 billion in 2014-15.

Total property tax revenue will increase from $5.45 billion to $6.14 billion over the next four years accounting for 34% of total revenue earned by the state.

 

 

 

Larry Schlesinger

Larry Schlesinger

Larry Schlesinger was a property writer at Property Observer

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