GST rise should help the property market

GST rise should help the property market

GST - or goods and services tax to give it its full name - is a topic of hot debate, not least because it applies to many of the purchases we make in everyday life.

One group believes an increase should be implemented if the property market is going to benefit, which will no doubt spur even more discussion among interested parties.

The Real Estate Institute of New South Wales (REINSW) explained how GST could be increased if property taxes were scrapped - a move that could cause friction in other sectors.

While this might be good news to anyone searching for home loans to secure their own property, it could have knock-on effects for other areas of the economy.

REINSW's Deputy President John Cunningham explained how the group is happy that the prime minister has agreed to carry out a review into GST.

"The Independent Pricing and Regulatory Tribunal has described them [land tax and stamp duty] as inefficient, and REINSW believes it should be abolished in a modern tax system," noted Mr Cunningham.

He explained how the tax system should be developed so it encourages investment, which is something the national property market is in need of at the moment.

This follows earlier calls from REINSW for the Reserve Bank of Australia (RBA) to avoid using interest rates as a means of keeping down property prices.

President of REINSW Malcolm Gunning emphasised how the RBA had also made suggestions that investing in real estate could be a risky option, which is simply not the case.

"The fact is that investors are more confident about putting their money in Australian property compared to the uncertainty of the share market and the underlying mistrust of this sector following on from the GFC," stated Mr Gunning.

He urged the RBA not to use the cash rate as a quick fix solution to the issue.

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