A stamp duty break for empty nesters aged 70+ could ease housing affordability stresses in major cities, Sydney and Melbourne, according to Angus Raine, Executive Chairman, Raine & Horne.
“The national housing debate focuses mostly on first home buyers, and with good reason given climbing real estate values combined with an ongoing shortage of new homes,” said Mr Raine.
Sydney housing values increased by 15.5% in 2016 and by 13.7%, according to the latest CoreLogic Home Value Index released this week[i].
“The trouble is that upgrading to a bigger home is not a simple or straightforward transaction, especially with more empty-nesters in Sydney and Melbourne sitting tight on large family homes,” said Mr Raine.
Recent analysis from SGS Economics and Planning[ii] indicated that a growing proportion of retirees in well-located neighbourhoods threaten to put added pressure on Sydney’s infrastructure and housing markets.
“Empty-nesters are hindering the second home buyer markets in our major capital cities because the stamp duty costs for them to buy a smaller property or a different location are too prohibitive,” said Mr Raine.
“Stamp duty eats into the retirement nest-eggs of many older Australians, especially those who have very little in the way of superannuation savings, because the majority of their working careers were completed prior to the introduction of compulsory superannuation in the early 1990s.”
To remedy this financial imbalance for older, self-funded retirees, Mr Raine is urging state governments to reconsider stamp duty tax breaks for homeowners aged over 70, who would like to downsize.
“Stamp duty-free real estate transactions for older Australians will help address some of the current supply constraints that are cramping the real estate plans of many upgraders,” said Mr Raine.
Sources: [i] http://www.corelogic.com.au/news/capital-city-dwelling-values-surge-10-9-higher-over-the-2016-calendar-year