The government of New South Wales is bracing for a slowdown in Sydney’s property market, despite predictions that the budget would be in significant surplus over the next four years.
Gladys Berejiklian, Treasurer of NSW, recently released the government’s half-yearly budget review, which showed that it recorded a surplus of nearly $4 billion for this financial year, approximately $500 million more than it predicted in June.
However, the review also urged caution about the continued strength of the property market. Approximately 12% of government revenue comes from taxes charged when individuals and companies purchase property, and almost 8.5% of revenue comes from taxes charged on residential stamp duty.
With property prices rising and the volume of residential sales high, the NSW government’s revenue from stamp duty increased by as much as 40% in the 2013-2014 financial year. Meanwhile, residential stamp duty increased by 19% in the 2014-2015 financial year, and by 13.4% in 2015-2016 financial year.
Berejiklian’s budget review predicts that stamp duty will grow by an average of 4.8% per year over the next five years. The government raised nearly $6.3 billion in stamp duty from property buyers in the financial year to the middle of 2016.
The government has, however, resisted calls to lower or reform stamp duty to help more first-home buyers enter the property market.
“Tackling housing affordability remains a major priority for the NSW government and we believe the best thing our government can do is to help deliver more houses to put downward pressure on prices,” Berejiklian said. “NSW annual dwelling approvals have more than doubled in the past five years, to a historically high 74,600, up from 34,600 in 2011.”
Berejiklian also commented favourably on the strength of Sydney’s housing market compared with the other capital cities.
“While the additional housing supply for Melbourne and Brisbane is more concentrated in their CBDs, Sydney's unprecedented boost in housing stock is more geographically dispersed,” she said. “This is providing more choice for home owners and will put downward pressure on housing in the years to come.”
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