Reforms risk locking home buyers out Sydney’s tightly-held suburbs

The Labor government’s controversial tax reforms and uncertainty over interest rates could exacerbate already chronic housing supply shortages in many Sydney areas, making it even harder for new buyers to scale the property ladder, new analysis has warned.

Exclusive PropTrack data has exposed home buyers already face an incredible wait for properties to come onto the market in many of the city’s most popular suburbs and recent changes could result in even less stock hitting the market.

The PropTrack data measured the average amount of time between property purchases and later resales, revealing it takes close to 20 years for properties to change hands in many areas.

Labor’s negative gearing and capital gains tax reforms are set to pass parliament following a deal this week with the Greens in the Senate.

Experts said the inclusion of grandfathering provisions for investors, who often make up more than 50 per cent of property owners in many areas, will mean many property owners have little incentive to sell, draining the market of vital supply.

Labor’s negative gearing and capital tax reforms are set to pass parliament following a deal this week with the Greens in the Senate. Picture: NewsWire / Martin Ollman

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The data revealed Cremorne Point and Waverton as the suburbs with the highest average

hold times for units in the country, at 18 and 17 years, respectively.

For houses, suburbs including Hurlstone Park, Bexley North, Greenfield Park, Dulwich Hill, Bonnyrigg Heights and Naremburn were among some of the most tightly-held suburbs, with owners staying around 20 years.

These suburbs skew toward older populations than the national average, according to ABS data, with many residents deeply connected to their neighbourhoods, close to family and well set up to age in place.

Many of these areas also command premium prices, making them tougher for aspiring and particularly young buyers to break into.

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New PropTrack data revealed Cremorne Point has the country’s longest average hold times for units at 18 years. Picture Daily Telegraph Monique Harmer

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REA senior Economist Anne Flaherty said the recent changes to property tax could also encourage homeowners and investors to hold onto properties for longer.

“It’s a very strong incentive for current property owners to not sell that property so they have the option of grandfathering benefits,” she said.

Higher taxes for capital gains would encourage investors to keep properties for longer, she

added.

“You’re paying a higher amount of tax on capital gains so you may want to hold that property

longer so you do get more gain at the end of the day.”

Existing owners had a further incentive not to sell in that moving would mean copping a hefty stamp duty bill on their next purchase, Ms Flaherty said

PRD chief economist Dr Diaswati Mardiasmo said many property owners were likely to hold off making moves due to recent changes shaking confidence.

“People tend to hold and not do anything when there’s so much change happening,” she said.

“Because of the number of changes and how quick they’ve been timeline-wise, its sort of is it over yet or are there any more tax changes that are about to come?

“(Homeowners) are now thinking, none of us saw these SMSF changes happening, is there any more change coming?”

Some experts are pointing to homeowners and investors holding onto their properties for longer in light of tax changes. Picture: NCA NewsWire / Max Mason-Hubers

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Ms Mardiasmo added while many property owners might result to a halt before making a sale, changes will likely impact investors the most.

“Any changes in tax is going to shake people’s confidence a little bit, especially as they try and work out what the new taxes would mean for their own individual financial situation and how it impacts them,” she said.

“The person might be holding their property because they’ve purchased it under SMSF, under a trust, as an investor or as an owner occupier.

“With that comes all sorts of different tax structures, incentives and any other possibilities that the tax might impact them.

“I think it definitely does give people some pause to have a look at it properly.”

Ma Mardiasmo said owners may want to talk to a tax specialist or accountant and see how these might impact them and the best way to handle their situation before moving forward.

Suburbs with the longest average hold period NSW

Source: PropTrack, average hold period of properties sold in the past 12 months. Calculated using minimum of 30 sales.

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