Powered by MOMENTUM MEDIA
subscribe to our newsletter

Stamp duty ‘compounding’ housing affordability concerns

The Housing Industry Association has warned that state and territory governments’ dependence on rising stamp duty revenue is the worst it’s been in a decade, placing added pressure on housing affordability.

According to the Housing Industry Association’s (HIA) Stamp Duty Watch report, state and territory governments’ dependence on stamp duty has “worsened significantly”.

The HIA report noted that in 2015–16, stamp duty revenue “accounted for 26.1 per cent of tax revenues”, the highest it’s been in 10 years.

Moreover, the research revealed that in December 2017, the typical stamp duty bill was $20,587, which added 3.1 per cent to dwelling prices.

HIA believes that stamp duty bills are “eating into home buyer deposits” and have forced Australians to take on larger mortgages that, according to the report, have increased loan repayments by $1,247 per year and over $30,000 for a 30-year mortgage.

Advertisement
Advertisement

HIA senior economist Shane Garrett noted that the rise in stamp duty costs are far outpacing home prices.

“Stamp duty bills have increased almost three times faster than house prices since the 1980s, and this trend will continue unless stamp duty is reformed,” the senior economist said.

“In Victoria, the typical stamp duty bill increased from 1.9 per cent to 5.2 per cent of the median dwelling price between 1982 and 2017, equivalent to a surge of 4,000 per cent in the cash value of stamp duty.”

The stamp duty burden for home buyers in NSW also rose from 1.6 per cent to 3.8 per cent, relative to the median home price within the same period.

Mr Garrett believes that disproportionate stamp duty bills need to be updated to better reflect increasing dwelling values, with the report findings indicating that no stamp duty rate reforms have been implemented in NSW since 1985, when the average home price was $70,000.

PROMOTED CONTENT


“Increases in home prices cause stamp duty bills to accelerate because stamp duty rate brackets are rarely updated. This is the problem of stamp duty creep,” the senior economist added.

Mr Garrett argued that state governments are “compounding the housing affordability crisis”, further revealing that total stamp duty revenue has almost doubled in four years from $11.7 billion to $20.6 billion.

The HIA economist warned that the trend was “unsustainable” and called for drastic changes to existing arrangements.

“By draining the pockets of home buyers to the tune of over $20 billion each year, stamp duty is a central pillar of the affordability crisis,” Mr Garrett said.

“A long plan to do away with the scourge of stamp duty would be a huge victory for housing affordability in this country.”

[Related: Government must reduce upfront housing costs, says industry body]

Stamp duty ‘compounding’ housing affordability concerns
mortgagebusiness

Are you a new-to-industry broker in the process of growing your business? Then there’s some great news: The Adviser’s New Broker Academy is back in 2021 and will provide you with essential insights into cutting-edge tools, strategies and processes to fast-track to success. Don’t miss your chance to attend. To secure your FREE place, visit newbroker.com.au now!

Charbel Kadib

Charbel Kadib is the news editor on the mortgages titles at Momentum Media.

Before joining the team in 2017, Charbel completed internships with public relations agency Fifty Acres, and the Department of Communications and the Arts.

You can email Charbel on: This email address is being protected from spambots. You need JavaScript enabled to view it.

Latest News

Reverse mortgage lenders have accessed a small fraction of the potential retiree housing market in Australia, according to Deloitte. ...

Pepper Money has priced its second I-Prime deal for the year, upsizing the figure to $850 million. ...

The LMI provider has announced a new CFO following the resignation of its current CFO, effective 24 September. ...

Join Australia's most informed brokers

Do you know which lenders are providing brokers and their customers with the best service?

Use this monthly data to make informed decisions about which lenders to use. Simply contribute to the survey and we'll send you the results directly to your inbox - completely free!

How long do you think it should take to discharge a mortgage?

Website Notifications

Get notifications in real-time for staying up to date with content that matters to you.