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.
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.
“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.”