The Victorian government says they’re looking to offer up a tax exemption to Aussies downsizing from large family homes during the state’s housing squeeze.
Last week, state premier Jacinta Allan told reporters that she hadn’t ruled out the one-off tax break in her new wave of as-of-yet unreleased policies aimed squarely at the severely undersupplied housing sector.
The Property Council argued that the proposal would see owners over 60 (aka the Baby Boomers who saw the property value of their four-bedroom outer city townhouses triple in recent years) given the opportunity to “downsize” and make way for young families to move in.
In their submission to the state’s ‘Plan for Victoria’, the group even claim it’s a move that Boomers themselves are pushing for despite the obvious property profit as the aging Aussies search for more “suitable accommodation”.
The council’s Victorian executive director, Cath Evans, said older homeowners find it hard to overcome the stamp duty “barrier” when downsizing.
“A focus on housing supply should not only incorporate the construction of new homes but the more efficient transaction of existing homes,” she said.
“This will promote a more efficient housing market by aligning the interests of older homeowners with the needs of prospective first homebuyers.”
Figures from Digital Finance Analytics earlier this year seemingly back up this claim, with the current market only having one in ten older Aussies with plans to downsize despite the majority wanting to.
Those who were yet to snatch up a smaller lot pointed the finger at the price of a replacement home, the high cost (both financial and physical) of moving, and the fear of change as being the biggest barriers for selling.
No silver bullet for the housing crisis
While not outright supporting the idea, Ms Allan left the door open for the change to come into action down the line as she revealed the government is working on key policy changes to boost housing stock behind closed doors, on top of its plan to build 800,000 new homes under its Housing Statement.
“We’re having a lot of discussions with the property council and other industry representatives about what more we can do,” Ms Allan told reporters in Hawthorn on Thursday.
“We are looking at building on the (housing) reforms we have in place, that does include conversations with industry about how we continue to partner with them to build more homes.”
The government has also been hinting at a significant reform to stamp duty, including the introduction of a broad-based land tax, despite warning that scrapping the longstanding system could leave a $30 billion hole in the budget.
The problem has also been recognised by the opposite side of the bench, with Liberal leader John Pesutto saying his party is “looking at options for people who want to downsize”.
Alongside the proposal, the council is also pushing for strata property laws to be overhauled so buildings can be sold with the backing of 75 per cent of owners, bringing the state in line with NSW and Queensland laws.
Ms Evans said this change could unlock some 100,000 new homes within 15 minutes of the city centre, particularly impacting badly designed or inaccessible buildings from the late twentieth century.
