Soaring stamp duty windfall for Treasurer
September 18, 2013
Treasurer Mike Baird: "It shows the housing in moving and it means additional revenue for the government". Photo: Ben Rushton
Sydney's buoyant property market is delivering a surprise boost to the O'Farrell government's coffers.
Government figures show the state netted $348 million in stamp duty on home sales in July. It is understood to be the largest monthly figure on record, surpassing the monthly totals collected amid the housing boom in 2003.
Stamp duty on residential transfers in July and August raked in $677 million, 30 per cent more than the same period last year.
Treasurer Mike Baird said he had been taken by "surprise" by the strength of the stamp duty surge.
"It's good news because it shows the housing sector in moving and it means additional revenue for the government," he said.
"This is a volatile revenue stream but the trend at the moment remains positive."
Stamp duties on property transfers and other commercial transactions account for more than 20 per cent of the taxes collected by the government. The state budget predicted a 20.5 per cent increase in stamp duty on home sales this financial year as very low interest rates, pent-up demand and rising investor confidence stoked activity in housing. But so far the increase has been 10 percentage points higher than that forecast. The windfall promises to ease some of the pressure on the NSW budget, which is forecast to be in deficit by $329 million this financial year. State finances have been battered in recent years by big write-downs in expected GST revenue.
The boost in stamp duty revenue has been driven by rising house prices and higher turnover of properties. The number of home purchases which attracted stamp duty in July this year was 41 per cent higher than in July 2012.
The Treasurer's monthly economic update, released on Wednesday, says "the NSW housing recovery is now under way'', with housing investment in NSW up 14 per cent over the past year and residential building approvals at levels not seen since mid-2005.
"The broader housing market is in structurally better shape than it has been for a decade," the update says.
The update includes NSW Treasury estimates that for every $1 million spent on extra residential construction, a possible $2.5 million would be generated in the overall economy. That spending would give rise to an additional three full-time jobs in the construction industry and a total of eight full-time jobs in the overall economy.
Mr Baird said conditions in the property market were still a "long way short of being anything like a boom" and described recent house price growth as "modest".
But he said the positive mood in the property market had spurred activity in home building and helped boost consumer confidence.
"I am confident that housing will be an important driver of our economy over the medium term," Mr Baird said.
The recent improvement in residential stamp duty revenue began in 2012-13 when collections rose by about 20 per cent compared with the previous year. More than 160,000 house purchases attracted stamp duty last financial year, up from 144,000 in 2011-12.
The government will provide a full update on its financial position in the half-year budget review in December.