Property analysts have uncovered property stamp duty in Australia is at record highs when compared with a generation ago, providing another hurdle to those looking to get on the property ladder in a rebounding economy still in the throes of the cost-of-living crisis.
A poll conducted by the Philanthropic McKinnon Foundation found the cost of housing impacted the life plans of over a third of respondents.
Stamp duty in Australia is a state-based duty charged on property transactions, usually at around 3 to 4 percent of a property’s value, and according to data released today by market-insight researcher PropTrack.
It detailed that a worker living in Greater Melbourne and earning an average $85,000 (US$55,000) per year would spend the equivalent of six months’ income on stamp duty purchasing a typical home.
While all states have recorded dramatic increases in stamp duty, Victoria, in particular Melbourne, is an outlier, with an increase of over six times what was charged in duty 40 years ago relative to income—the biggest leap in stamp duty out of all the state capitals.
Melbourne was trailed closely by Sydney where house buyers must save a deposit nearly five and a half times what was required in the 1980s.
In Brisbane, figures were slightly lower, with an investor needing to commit 3.7 months of income towards stamp duty. The figures for buyers termed as owner-operators was 3.7 percent of income, which is still five and a half times more than purchasers stumped up in the 1980s.
Three months’ wages are required to satisfy stamp duty in Canberra, Darwin, Hobart, and Perth.
There are regional exemptions on how much stamp duty is payable, determined by things like whether the property is a purchaser’s first home, a new build under a certain amount a family farm, or a deceased estate. Exemptions can also apply when transferring property between spouses or former spouses.
As part of state tax reforms, in 2012, the Australian Capital Territory (ACT) enacted a plan to abolish conveyance duty by incrementally adjusting concession rates over the next 20 years.
The tax was described by the government as “highly inefficient and inequitable for several reasons.” They noted it was a financial barrier to first-home buyers and discouraged existing homeowners from buying in areas that would suit their lifestyle better.
The New South Wales state government also floated the idea of a stamp duty overhaul in 2022.
Nick Garvin, a research manager at economic think tank e61 Institute, told the AAP that state-based increases were presenting a major obstacle to people looking to enter the property market and believes that an overhaul of the tax could encourage new-buyer growth, although it was unlikely to make a dent in overall house prices.
“Housing affordability and availability is without a doubt a challenge of our time, ”said Mr. Garvin.
“Governments and policymakers must consider the unpopularity of stamp duty, and the indirect impacts stamp duty has on various other parts of the economy and people’s lives.”
Mr. Garvin added stamp duty that prevents people from moving into other jobs when they want to puts a “bit of a drag on economic growth.”
PropTrack senior economist Angus Moore echoed Mr. Garvin’s thoughts, saying stamp duty was costly and inefficient.
“While the rise has largely been incidental, rather than an intentional increase in tax rates, stamp duty reform is critically needed to allow the property market to operate more efficiently,” Mr. Moore said.
