‘Struggle Street’ builders seek stamp duty relief

The national cabinet must deliver emergency support for the housing sector through a one-year moratorium on new regulations.

The pipeline of new home sales dried up through the June quarter, pointing to a bleak outlook for residential construction activity in the back half of this year.

The national cabinet must deliver emergency support for the housing sector through a one-year moratorium on new regulations and eliminate the “cascading ­application” of stamp duty on GST, development taxes and levies to stimulate the residential building industry.

As the building sector faces an uncertain outlook in coming months and years as the economy struggles to recover from the COVID-19 recession, the Housing Industry Association is pushing for stamp duty concessions for new home building contracts entered into by December 31 and permanent exemptions for over 65s seeking to downsize.

The urgent call for reform from a sector employing more than one million Australians comes as home building suffered its sharpest quarterly contraction in two decades as the COVID-19 pandemic weighed on building ­activity over the three months to June.

The value of total residential construction dropped 5.5 per cent in the quarter to $16.6bn, according to seasonally adjusted figures from the Australian Bureau of Statistics — the lowest quarterly value since mid-2014, and the steepest decline since late 2000.

As experts warned that the sharp retreat in residential building would extend and even intensify into the second half of the year, weighing on the national economic recovery, CBA head of Australian economics Gareth Aird said “significantly” lower population growth because of restricted net migration had left underlying demand for housing lower than prior to the pandemic.

“Falling dwelling prices and heightened uncertainty around the economic outlook will also weigh on new residential construction,” Mr Aird said.

In its pre-budget submission, the HIA said the national cabinet should support a 12-month national freeze on new regulations affecting the residential building industry. The submission said it would “provide the industry ‘clean air’ to focus on recovery”.

“This should include building regulations, workers compensation, licensing, training requirements and planning reforms.”

The HIA also backed the Australian Industry Group’s call for the Morrison government to restore the annual migration cap to 190,000 “with a focus on skilled ­labour”.

AiGroup this week warned of the “huge implications” of ­migration falls on the housing and construction sectors, which had been supported by “high levels of permanent and temporary migration”.

 

The housing lobby group, representing 60,000 members, also recommended “the national cabinet identify ways to eliminate the cascading application of stamp duty on GST, development and infrastructure taxes and levies”.

As the second-most taxed sector in the economy, raising about $40bn a year across all levels of government, the HIA said “taxes and red tape continue to cause ­serious problems for existing projects that could provide hundreds if not thousands of houses and jobs for Australians”.

The combined costs of statutory taxes, regulatory costs and excessive charges make up 50 per cent of the cost for a new house and land package in Sydney, 37 per cent in Melbourne, 33 per cent in Perth and 32 per cent in Brisbane.

Describing stamp duty as an “inequitable and inefficient tax”, the HIA said it had “a disproportionately high impact on vulnerable households who face signifi­cant changes in their life circum­stances such that they need to move … The higher moving costs are a barrier to people moving to where better employment opportunities exist.”

The HIA said “as pre-COVID housing projects reach completion, there will be fewer new projects coming in behind them”.

“This impact will be felt in both the detached housing market and the higher density apartment market for some time to come,” the HIA submission said.