PROPERTY prices will rise if stamp duty relief goes to home buyers, economists warn.
Nanjing Night Net

But both Northern Tasmania economist Tony Gray and economic commentator Saul Eslake believe the idea of a grant for first-home builders has merit.

The Examiner revealed on Friday that the state government is considering measures, being pushed by the real estate and construction industries, that could address falling house sales and builds.

Mr Gray has warned that there is “no free lunch” in providing stamp duty concessions or first-home owner grants.

“The decline in stamp duty (revenue) is really from boom time levels of both sales activity and high price jumps. The problem is that the government spent all of the money and naively budgeted for boom conditions to continue,” Mr Gray said.

“The (real estate industry) proposals undermine government tax revenue and, while it may stimulate property sales, the need by government to run a balanced budget over time means they will need to cut back on employment and the provision of services and infrastructure – weakening the economy when the cycle is already weak.”

Mr Gray was more enthusiastic about the Housing Industry Association proposal to give a $14,000 grant to first-home builders, and scrap the $7000 that goes to first home buyers – as long as it has a short time limit.

He still believes this will increase the cost of building a home, and other construction as the demand for workers rises.

Mr Eslake describes first-home owner grants and stamp duty relief as a complete waste of time.

He said long-term evidence showed such measures only served to push up property prices and benefit vendors and their real estate agents.

Mr Eslake said stamp duty should be abolished, and replaced with land tax on owner-occupiers under a phased-in system.

“Stamp duty is a bad tax and you don’t make it a better tax by exempting some people from it – you do that by abolishing it,” he said.

This story Administrator ready to work first appeared on Nanjing Night Net.

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