Abolish stamp duty to help recovery: REA

REA Group, owner of the country’s largest online property listing business, has joined the chorus calling for reform of stamp-duty charges.

REA group chief Owen Wilson. Picture: David Geraghty

REA Group, owner of the country’s largest online property listing business, has joined the chorus calling for reform of stamp-duty charges as governments look for a way to spark an economic recovery.

The company, majority-owned by News Corporation, publisher of The Australian, has called for a new system that allows for greater ease of transacting, as state governments also push for dumping stamp duty in favour of a cheaper annual tax paid by homeowners.

REA Group chief executive Owen Wilson told The Australian that stamp duty was both regressive and an impediment to people moving homes and there was a need to look at broader, more efficient taxes.

While volumes are down due to the coronavirus, Mr Wilson rejected predictions of widespread price falls that some banks, including the National Australia Bank this week, have made.

Real estate agency CBRE on Wednesday also predicted a broad 10 per cent pricing drop, saying this was not an unreasonable scenario with downside risks, subject to how long lockdown measures remained in place and how significant and sustained the economic impacts and subsequent job losses were across the economy.

Mr Wilson is instead working towards an expected return to more normal levels of activity, albeit staggered across different states, with Queensland leading the way while southern states, where restrictions may be lifted later, lagging.

To combat the slowdown, the company’s listings portal realestate.com.au has launched a series of new products to stimulate activity among vendors.

Real estate agents will have access to a pay-on-sale product, which offers the portal’s “premiere” listing service, with payment only due once a home is sold. The company is also offering some standard listings at a discount next month to key agents to stimulate activity.

Mr Wilson said the limited offer was partly to create a virtuous circle with more vendor activity driving more transactions.

While the market remains uncertain, home buyers are switching to digital offerings, with the use of virtual property viewing technology spiking. Web-based technologies to look at homes emerged after bans on open inspections were imposed as part of the COVID-19 response.

The number of prospective buyers using 3D tours of properties on the site increased by 285 per cent in the second week of April compared with the same week of March, according to realestate.com.au.

Views on digital inspection videos were also up 88.3 per cent over the same period.

Mr Wilson said physical auctions made up a small proportion of the market and sales were still being made, with a record-breaking 10.7 million visitors to realestate.com.au in March alone. “People are still buying and people are still able to access finance from banks,” he said.

Online auctions have also proven successful, with CoreLogic data showing about a third of homes put under the hammer selling over the past month despite a ban on public auctions.

Despite evidence of strong demand, the economic downturn caused by the virus has spooked many potential sellers, with Ray White managing director Dan White saying the group “is selling more than we are listing”.

Across the Australian network last week, about 640 homes were put up for sale with Ray White, a 50 per cent drop on the same time last year.