THE NSW VENDOR TAX
17th August 2005
The following comment is from an estate agent in Balmain, NSW.
Not sure if you have anything planned, but an article regarding the vendor tax would be great.
This is quite a major change and I would be interested in your views on it. The people we have spoken to (particularly sellers) are positive about the change. This may be false hope.
Since the introduction of the tax, the enquiry level at our office from investors became non-existent.
In the past 6 months the rental market prices have risen by about 10%. Most rental agents (in our area of Balmain) are reporting a shortage of properties to lease and they expect the rents to continue to rise.
I believe these two factors (tax removal and rising rents) may now make property appealing to investors again.
I still do not think that most residential property in Sydney is a worthwhile investment at present, but do believe more investors will be tempted.
The vendor tax changes do not alter the fundamentals on the value of real estate i.e. it is too expensive with or without the vendor tax.
However, coupled with the rising rents, it is an interesting situation, and far more palatable to investors.
Peter O'Malley, Harris Partners, Balmain.
Neil Jenman replies:
The NSW State Government took a terrible caning over this tax. Predictably, the howls of protest have come from those whose incomes have suffered - agents, developers and, generally, the more wealthy investors.
In all the criticism, there was no mention of something else that was introduced at the same time as this much-loathed tax - the abolition of stamp duty for most first home buyers. Not a word of thanks or praise.
Now that the Vendor Tax has been abolished, the comments are again focused entirely on the interests of those making the comments.
In NSW, agents are saying investors will be back. In Queensland, where they rejoiced that the NSW tax was encouraging investment in Queensland, the real estate institute (REIQ) is saying that the abolition of the NSW tax will encourage more investment in Queensland.
How so?
Well, investors will now sell in NSW and invest in Queensland.
Tax or no tax, the self-interest spin never stops.
The new Premier of NSW, Morris Iemma, seems like a decent fellow and his deputy, John Watkins was once a Fair Trading Minister who really cared about consumers (much more than those who followed him). But even the most decent politicians have to pander to self-interest if they want to remain in power.
The most interesting article I have read about the abolition of the Vendor Tax was written by Ross Gittins. You can read it by clicking on the URL link below.
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This article was taken from the Questions and comments page of the Jenman website.
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