Stamp duty sways potential owner-occupiers, interest rates and land tax deter investors

Stamp duty sways potential owner-occupiers, interest rates and land tax deter investors
Enzo RaimondoDecember 8, 2020

The REIV regularly surveys its Members to measure market sentiment and develop a deeper understanding of what influences decisions about buying, selling or leasing.

One of the topical issues canvassed is what drives people to buy – or not to buy – property, both residential and investment? Not surprisingly, there are differences between the two classes of purchaser.

For those considering a residential purchase, the most important factor was stamp duty. Buyers understandably see spending 4-5% of the purchase price on this tax as a significant impediment. That accords with the views of economists who cite the tax as an impediment to moving.

It was closely followed by the obvious issues of securing finance, interest rates and the availability of quality stock. Interestingly, this suggests that buyers are more likely to compromise on the quality of the home than they on are the cost. Of little importance were planning issues and land tax, as most buyers don’t buy with the singular aim of developing.

When asked what drives property investors, the most substantial difference in responses was the issue of land tax, mainly as they need to pay it when owner-occupiers generally do not. Investors ranked interest rates as the most important factor and were much more concerned about the impact of planning and building laws. This reflects the fact that the singular aim of most investors is to make money from the property by either renting it or developing it. A project or investment is not feasible when the cost of ownership – land tax and interest rates – is too high.

Enzo Raimondo is CEO of the Real Estate Institute of Victoria.

 

Enzo Raimondo

Enzo Raimondo is CEO of the Real Estate Institute of Victoria.

Editor's Picks