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Stamp duty consensus applauded

Election promises from both major parties in Victoria to cut stamp duty are expected to improve affordability in the state.

Labor has announced a $115.4m plan to abolish tax for first home buyers building homes in regional Victoria, while the Coalition's $750m promise will cut stamp duty for first home buyers in half over four years.

Housing industry associations the Housing Industry Association and the Real Estate Institute of Victoria (REIV) have welcomed the move to attack stamp duty, with expectations no matter who wins the election, affordability will improve.

The REIV said both policies have good elements, but backed the Coalition's policy, which is "more generous".

"Once fully implemented the Coalition's policy would ensure all Victoria first home buyers were not subject to the highest stamp duty rates in Australia," REIV CEO Enzo Raimondo said.

"The Coalition's initial 20 per cent cut would take stamp duty rates (as a percentage of the sale price) back to what was being paid around 10 years ago for first home buyers. The ALP's policy does not reduce stamp duty for all home buyers but continues its policy of targeting first home builders, particularly in regional areas," Raimondo said.

Raimondo argues the ALP commitment is welcome but the majority of first home buyers buy in metropolitan areas.

The HIA's Victorian executive director Gil King said: "Victoria has the highest stamp duty in the country. So exemptions on new homes will stimulate economic activity and increase housing supply, which in turn will take pressure off interest rates."

"HIA has long argued that stamp duty is an inefficient tax. It not only makes it hard for people to gain entry into the housing market, but also locks owners into properties, meaning that home owners less readily upsize or downsize as their life circumstances change," King said.

By Ben Abbott | 22 Nov 2010