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 "The property market tide is in ebb. The introduction of new taxes for NSW investors has added additional pressure to an already slowing Sydney property market." - Mark |
| Housing bubble 'safe from bursting' |
| By Natasha Robinson |
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May 31, 2004 ECONOMIC researcher BIS Shrapnel has downplayed fears the housing bubble will burst, despite a 15-year record low for Sydney auction clearance rates over the weekend. Economists blamed the poor NSW results – half the rate recorded in Melbourne – on the Carr Government's property tax changes deflating an already cooling market. Sydney's clearance rates sank to a 15-year low of 32.3 per cent, falling from 45.4 per cent, while those in Melbourne rose from from 57 to 62 per cent. Despite evidence to the contrary in Sydney at least, BIS Shrapnel said the housing price "bubble" would not burst. "Overall, underlying demand is expected to remain strong, supported by continued strong net overseas migration and improving economic growth and employment prospects," the research house said. But the Carr Government's property tax changes had effectively killed the investor market in NSW, BIS Shrapnel director Robert Mellor said yesterday. "A collapse is probably a reasonable term to refer to investor demand," he said. "It's probably the nail in the coffin in terms of people's attitudes to considering investment." NSW property tax changes take effect tomorrow, imposing a 2.25 per cent tax on the sale of investment properties. NSW Treasurer Michael Egan defended the controversial tax yesterday, saying the Government's property reforms had helped first-home buyers, with the abolition on stamp duty on homes sold for less than $500,000. A spokesperson for Mr Egan said the Government had paid out $56.7 million in benefits to first-home buyers since the mini-budget in April. But the deputy chairman of the Ray White group of real estate agents in Sydney said the Government's reforms to property tax to reduce investor activity were unnecessary in a cooling market. "Any time the government interferes in the market, it always produces effects that are unforseen," said Sam White. "The Government is really milking property investors for all they are worth." Housing Industry Association chief economist Simon Tennant said: "These are horribly repressive taxes that are really going to scar the NSW property investment market for some time." BIS Shrapnel's research on the economic outlook for the next three months showed first-home owner activity was weak. It said the drop was a further sign the property market had cooled, with buyers taking much longer to decide to purchase. In Melbourne, agents were attributing the improvement in auction clearance rates to a shortage of properties for sale rather than signs of any significant upturn in the housing market. The number of properties on the market was just over half those offered for sale at the same time last year. Reference: The Australian 
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