Runaway stamp duty bills on residential property are hindering Australian home owners’ ability to enter the housing market, the Bankwest Residential Stamp Duty report has revealed.
The research found that stamp duty on the typical Australian home has soared 59% over the past five years, almost double the rise in household income over the same period. Critically, almost $53 billion of stamp duty receipts – both residential and commercial – have been paid to State and Territory Governments over the past five years, while annual stamp duty revenues have increased 77% over the period.
The research helps explain why Australians are finding it difficult to enter the housing market, and reveals that more than half of all state governments are benefiting from threshold limits that have not been changed to reflect higher property values.
The bankwest research found that struggling home buyers were forced to set aside at least 20% of their annual household income to pay stamp duty bills in four out of eight capital cities in July 2008 – Sydney, Melbourne, Adelaide and Perth. This compared to only two out of eight capital cities – Sydney and Melbourne – in 2003.
The data was sourced from State Government Revenue Offices, the Australian Bureau of Statistics and Residex.
Key highlights of the research included:
- Sydney and Melbourne home owners would need almost three months of their salaries to pay stamp duty for median priced properties, the highest stamp duty burden in the nation.
- Brisbane has the lowest stamp duty bills, where home owners only had to work one month to pay stamp duty for median priced properties.
- Stamp duty bills have more than doubled in six states & territories in the past five years – Tasmania (177%), Queensland (151%), Northern Territory (145%), Western Australia (127%), ACT (111%) and South Australia (102%).
- Critically, stamp duty thresholds have been left unchanged for owner occupiers in NSW, South Australia, Tasmania and the ACT since 2003, despite a 63% national rise in house prices.
Chief Executive of bankwest Retail Ian Corfield said the research indicated more could be done to ease the stamp duty burden being borne by Australia’s 4.9 million home owners.
“This is the downside of the house price boom that has pushed up stamp duty bills and burdened home buyers across the country with an additional tax expense,” Mr Corfield said.
“Home owners in half of Australia’s capital cities now need to set aside more than 20% of their annual incomes for stamp duty bills to buy a new house. In some states home buyers have to work for three months just to pay state government stamp duty.”
The rate of stamp duty charged on a property purchase increases as the property’s value passes through a series of thresholds. For example in NSW the rate of stamp duty is 3.5% between $80,000 and $300,000, but rises to 4.5% between $300,001 and $1 million.
In many states the house price thresholds at which higher rates of stamp duty are charged has not increased, meaning the median house price attracts a higher rate of stamp duty than in the past.