Property developers push for stimulus boost as estate sales lift

NSW has become the latest state to look to housing to stimulate the flagging economy.

In NSW, the threshold above which stamp duty will be charged on new homes for first home buyers will be lifted from $650,000 to $800,000, with the concession phasing out at $1m. Picture: Kerris Berrington

Major property developers have received a boost from the latest stimulus package to combat the impact of the coronavirus crisis and called for an expansion of measures by the Berejiklian government.

The government’s announcement that it would provide stamp duty relief for first home buyers on newly built properties worth up to $1m lifted the building sector at a time when housing finance is slowing and residential property prices are sliding.

“It will help stimulate the state’s economy and also provide incentives for first-home buyers,” Property Council acting NSW executive director Belinda Ngo said.

“There is no doubt that COVID-19 has seen a significant reduction in development and construction activity especially in residential.”

The property industry has lobbied for both short-term concessions and direct measures to stimulate both demand and supply, as well as structural changes to stamp duty.

In NSW, the threshold above which stamp duty will be charged on new homes for first home buyers will be lifted from $650,000 to $800,000, with the concession phasing out at $1m.

UDIA NSW chief executive Steve Mann called the relief package timely but warned it may not be enough to see significant recovery from COVID-19.

“In a COVID-19 environment, this scheme may need to be broadened. If you really want to stimulate the sector the NSW stamp duty scheme needs to include all new-home buyers, not just first-home buyers,“ Mr Mann said, noting they accounted for just 27 per cent of the market.

Much of the Morrison government’s HomeBuilder stimulus has bypassed NSW due to the low-price threshold for the scheme but developers now believe Sydney will benefit.

Stockland chief executive communities Andrew Whitson said the changes to stamp duty thresholds were welcome for first home buyers looking to build.

“It will allow more first-home buyers to get into the Sydney market, and help drive confidence in the sector,” he said.

“Coupled with the federal government’s HomeBuilder stimulus package, these policies will support thousands of construction jobs at a time of uncertainty for the broader economy,” he said.

The move also prompted credit agency Moody’s to cite the benefits for developers, which it dubbed a “credit positive” for the construction sector, particularly for Stockland. Stockland added 1.6 per cent to close at $3.28 while rival Mirvac bumped up 1 per cent to $2.11.

Moody’s vice-president Saranga Ranasinghe called out the impact on Stockland, which is the largest master land estate developer and focuses on owner-occupiers, where about 49 per cent of sales are made to first-home buyers.

“The temporary axing of stamp duty, along with the previously announced $25,000 HomeBuilder grant, will further support the first homebuyer segment of the market,” she said.

Ms Ranasinghe said residential construction had been soft since peaking in June 2018, and the agency expected the stimulus measures to partially mitigate weakness in the single dweller segment of the residential market.  “The Reserve Bank has also provided support through rate cuts, and banks through the extension of mortgage repayment holidays, although reduced migration continues to weigh on housing demand,” she added.

REA executive manager, economic research, Cameron Kusher, said the announcement of HomeBuilder had triggered a land rush, with inquiries for vacant residential land surging over the past two months.

Email inquiries to residential agents on realestate.com.au hit a record high in June, jumping by 11.2 per cent, following a 36.6 per cent increase in May as lock downs unwound.

Year-on-year, total email inquiries to agents had doubled, Mr Kusher said.