re: rates up. but rates still too low. rabbitoh rabbittoh - i...

re: rates up. but rates still too low. rabbitoh rabbittoh - i just found this. no doubt that the first home buyers grant, probably did the same thing - the house prices were simply inflated


Stamp duty cut could raise prices
August 02, 2006 10:00am
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CUTTING stamp duty on real estate could force soaring WA housing prices even higher, the state department of Treasury and Finance has warned.

"In an environment where demand already exceeds supply, policy measures which increase demand, such as stamp duty cuts, are likely to result in further price rises," Treasurer Eric Ripper said.

"While such a result would benefit real estate agents, it appears on the evidence to date that it would do little to help first homebuyers."

The advice from the DTF noted a recent Curtin University study, which found stamp duty concessions for first homebuyers in 2004-05 resulted in increased demand for housing.

The study also quoted research in the United Kingdom showing that some tax relief for owner-occupiers had been ineffective, resulting in higher house prices.

In addition, the ANZ Bank in its 2003 submission to the Productivity Commission Inquiry into First Home Ownership noted that:

'A fall in stamp duty is likely to lead to a corresponding rise in house prices. House buyers would be little better off, and house sellers would obtain a windfall gain at the expense of State Governments.'

Mr Ripper said Opposition calls for an immediate cut in stamp duty, as a method of addressing housing affordability, were over-simplistic.

"One of the key issues we face in Perth is the delivery of land to the market and the availability of skilled labour to build houses," he said.

"That is why the Carpenter Government has appointed a land release co-ordinator to expedite major subdivision applications and review planning conditions which are delaying land releases.

"We have also announced a reduction in the apprenticeship times for key construction and residential construction trades to address skill shortages in the housing sector.

"Addressing these supply issues should lead to more affordable housing being built in Perth's suburbs."

The Treasurer said further cuts to stamp duty would be considered as part of Stage Two of the State Tax Review, which is due to release its final report next year.

"Based on the evidence presented so far, I think it would be unwise to cut taxes at a time when doing so could actually force house prices up even further," he said.