The real estate industry in South Australia has taken the big stick to the State Government, accusing it of stifling the sector and preventing future growth.
With just six weeks remaining before a state election, the Real Estate Institute of South Australia (REISA) says its tax burden is too high.
“In this financial year, property taxes will account for $1.64 billion or 40 per cent of State generated revenue,” REISA said.
“Over the next three years, this will rise to well over $2 billion or 43% of revenue.”
The institute’s chief executive officer Greg Troughton says the tax regime has a negative economic impact.
“The ironic thing is that the escalating use of the property industry as a means to generate taxation revenue is actually stifling the industry and, by doing this, it’s stopping further and even greater revenues being generated from increased activity,” he said.
“When you tax the property industry as much as this State does, then you inevitably have flow on effects such as impeding our competitiveness at home and abroad, reducing the level of housing affordability and evaporating the dream of all South Australians to own their own home.
“While reducing the taxation burden would initially hit the balance sheet hard, budgets would soon bounce back from increased activity within the sector not to mention numerous flow-on effects by stimulating other sectors of the economy.”
The institute statement is a departure from its conciliatory statements last year when it applauded stamp duty concessions and grants designed to stimulate the sector.
The $8500 New Residential Housing Construction Grant , however, expired on December 31 and the First home Owners Grant is scheduled to end on July 1.
REISA says stamp duty and land tax continue to be two of the most significant imposts on the property industry.
“Stamp duty on the latest median house price in Adelaide is currently sitting at $16,730 not to mention an LTO transfer fee of $2, 989.
“The effects of this exorbitant tax take will be compounded following the scrapping of the $5,000 First Home Owners Grant.
“Land tax is the most punitive regime in the country for holdings over $1 million and continues to thwart investment and discourage South Australians from investing in their futures.
“The effects of these two taxes in particular are enormous. First home buyers can’t afford to buy, current home owners don’t want to invest in a second property and pensioners and self-funded retirees can’t afford to downsize or hold on to any extra properties.
“You can’t have it both ways. You can’t continue to milk an industry while doing nothing to help keep it competitive and buoyant. One eventually has to give.”
Planning Minister John Rau said recent concessions decisions would continue to provide stimulus.
“The State Government has recently announced further stamp duty concessions of up to $21,000 for ‘off-the-plan’ apartments within the inner metropolitan growth area,” he said.
“This comes on top of a similar concession available within the city. This will stimulate opportunities for young people entering the market, retirees seeking to downsize, as well as investors.”
