A promise by the ruling Tasmanian Liberal party to slash stamp duty for seniors is a welcome move likely to fuel further interest from sea and tree changers from interstate, with flow on benefits for the local economy. And let's hope it creates pressure for other states to do likewise.
But it does continue the unfortunate election-time political games being played with this issue.
According to media reports, the Liberal party has said it will introduce the stamp duty cuts if re-elected at the State’s 3 March 2018 election. Eligible pensioners would be able to receive the discount on homes purchased up to $400,000 for 12 months. This would reduce stamp duty for a $400,000 home from $14,000 to $7,000.
It is estimated that 50,000 Tasmanian households would be eligible for the discount, as well as many seachangers and tree changers from other states who are showing great interest in the apple isle already. Some developers of downsizer properties located in Tasmania are reporting that up to 30% of all their enquiries are coming from potential interstate buyers.
The promise of any stamp duty reduction for downsizers is of course welcome, but does continue the somewhat disturbing practice of such discounts targeted at retirees being floated as an election time ploy rather than as a serious policy proposal.
In February 2017 – just one month before an election – the then ruling Liberal party in Western Australia made a similar announcement. It promised that, if re-elected, eligible seniors would pay no stamp duty on property worth up to $440,000 and the tax would be roughly halved on a $750,000 property. The two-year program was to be capped at 2,000 houses per year, representing lost stamp duty revenue for the State of up to $25 million.
But the then Opposition ALP party came straight out of the blocks to attack the policy, stating that it had no funding attached and represented a “debt funded promise to buy votes”. The ALP was subsequently elected in March 2017 and promptly kicked the downsizing stamp duty cut idea into the political rubbish bin.
Tasmania is becoming an increasingly attractive location for downsizers, and regularly appears in the most popular search lists.
According to CoreLogic, Tasmanian property prices increased by 12.7% over the 12 months to October 2017, with Hobart prices leading the charge.
“Hobart is benefiting from renewed housing demand in the form of interstate migration, particularly Sydneysiders and Melbournites who appear to be utilising their enhanced wealth positions to buy very well in Hobart, where housing prices are substantially lower than those in Australia’s largest cities,” says Tim Lawless, head of research at CoreLogic.
The same level of popularity cannot be said for the Tasmanian Liberals, who are facing an uphill battle to retain their majority in the Tasmanian Parliament. The most likely election result would appear to be a hung Parliament, where no political party has a majority.
It is good news that the Liberals are promising stamp duty cuts for seniors, particularly given an analysis by Downsizing.com.au from July last year which shows the issue is barely on the radar of most mainland State Treasurers.
In addition, report after report has shown that stamp duty is a major barrier to older home owners who want to downsize. The lack of action by State Governments on stamp duty cuts is puzzling, given that downsizing retirees tend to free up larger family homes for the younger, larger families who really need them, and it creates flow on benefits for the entire housing market.
As a result, it is surely time for seniors-friendly stamp duty policies to be pushed out by State Governments as a matter of serious policy between elections, rather than as shaky promises in the lead-up to elections.
So let’s stop the political games around downsizing stamp duty cuts and get serious about the economic benefits.
By Amanda Graham, Co-CEO of SeniorsHousingOnline.com.au and Downsizing.com.au