Fixer-uppers cut state’s stamp duty takings

More people renovating an existing home rather than buying a new one has hit Queensland stamp duty revenue hard.

Olivia Lam and partner Louis Kleimeyer would rather renovate than buy a new home. Picture: Glenn Hunt

More Queenslanders are deciding to renovate homes rather than sell, costing the state government stamp duty revenue it had been counting on.

Property purchases are expected to fall 5.5 per cent in the 2018-19 financial year before dipping a further 3 per cent the following year.

The decline has forced the government to revise down stamp duty revenue expectations, with residential returns down 13 per cent this financial year and 15.6 per cent in 2019-20.

It is the third year in a row the Palaszczuk government has been forced to revise down expectations for its tax take from the property trade, leaving a hole in revenues.

A 12.5 per cent surge in the number of homeowners expected to renovate rather than upgrade this financial year has also contributed to revisions.

Olivia Lam and Louis Kleimeyer, both 29, are looking to enter the market and join the state’s growing renovator market.

With a budget of $600,000, the couple have factored in additional renovation funds when looking at prospective homes in Brisbane.

“We are looking for something we can renovate — we like getting our hands dirty,” Ms Lam said

“That’s our expectation with what is available within the market and our budget.”

The couple helped Ms Lam’s parents renovate their Paddington home several times over 10 years, and are prepared for the challenge. Ms Lam said they were not interested in the state’s $15,000 first-home buyers grant as it did not apply to existing property.

Real Estate Institute of Queensland CEO Antonia Mercorella said increasing the grant might have helped stimulate the market: “Not everyone wants to build their first home and, in regional Queensland particularly, there are homes already built that are cheaper than building new.”

Brisbane buyer’s agent Meighan Hetherington, director of Property Pursuit, suggested a reduction in stamp duty might encourage buyers into the market.

Commercial property buyers, meanwhile, have been hit with an increase in the rate of land tax for holdings over $5 million.

Property Council Queensland executive director Chris Mountford said the government’s “latest cash grab” would cause a ripple effect: “This tax slug makes job-generating investment from offshore players in key sectors like tourism less likely in Queensland.”

The absentee property surcharge on foreign buyers has also been increased from 1.5 per cent to 2 per cent to be in line with NSW and Victoria. Australian citizens living abroad will be exempt.