Stamp duty now costs up to six times more than a generation ago

Homebuyers are paying up to six times more in stamp duty than a generation ago, as incomes have not kept pace with surging home prices, according to new research.

Analysis from e61 Institute, in collaboration with PropTrack, found that the cost of stamp duty is the equivalent of six months income in Sydney and Melbourne, which has doubled since the 2000s and grown as much as six-fold since the last generation.

In Sydney, stamp duty on a median-priced home is equivalent to six months of full-time post-tax income, which is 5.4 times higher than it was in the early-to-mid 1980s.

While in Melbourne, buyers need the equivalent of six months of full-time post-tax income – a six-fold increase from four decades ago – the largest increase of any state.

PropTrack Senior Economist, Angus Moore, said stamp duty is a very costly burden on home buyers. 

“Home buyers in Sydney and Melbourne must spend half a year’s worth of full-time income, a burden that has increased enormously compared to a generation ago,“ Mr Moore said.

“Stamp duty is an inefficient tax because it discourages people from moving to homes that suit them.”

Mr Moore said the rise had largely been incidental, rather than an intentional increase in tax rates. 

“Home prices have grown faster than incomes, and stamp duty brackets have not kept up with growing prices,” he said.

“This increase matters.”

In Brisbane, owner-occupiers actually pay less due to concessions, however, stamp duty still represents around $25,900 or 3.7 months of income for an investor.

For an owner-occupier, it is equivalent to $18,700 or 2.7 months of income – 5.5 times higher than four decades ago.

According to the research, Adelaide, Perth, and Hobart have also seen increases in the cost of stamp duty. 

Stamp duty on a median-priced home is 4.4 times higher, relative to income, in Adelaide, 4.5 times higher in Perth, and six times higher in Hobart.

Source: PropTrack/e61 Institute

According to a McKinnon poll, housing costs – of which stamp duty is an important part – have caused one-quarter of Australians under 40 to delay changing jobs, caused one-in-five in their 30s to push back having children, and prevented people of all ages from moving home. 

According to the research, when Australians were asked about their main priorities for state and territory government housing policies, abolishing stamp duty stuck out as the most chosen response, with more than one-third of people selecting it in their top five. 

All of the next most popular responses, including reducing land tax, were at least 5 per cent lower.

Research Manager at the e61 Institute, Dr Nick Garvin, said stamp duty was clearly negatively impacting people’s lives and Governments need to make a change.

“Overhauling the current stamp duty system has the potential to alleviate these pressures on individuals and the economy more broadly,” Mr Garvin said.

“Housing affordability and availability is without a doubt a challenge of our time. 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.”

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