Tag: Stamp Duty

The Property Cracks Are Widening

Today we look at some of the recent research from a flurry of surveys across the property market. Combined, they paint a concerning picture. And we also look at the stamp duty question, later in the show, so stay around for that!

Some 26% of Australians see mortgage repayments as a significant cost-of-living concern – that means 5.05 million people may be worried about keeping up with mortgage repayments in the coming months.

NSW Property Services Commissioner John Minns told a panel discussion on Tuesday he would like to see the land tax change expanded to include the whole property market and not just first home buyers.

But just remember such a move would primary benefit property investors who could offset the annual tax cost against the income from the property, whereas owner occupiers cannot, so in fact this could have a two fold distorting effect. First lifting the price of property by the stamp duty saving, and second orientating the benefits towards investors. In short this “reform” is not what it seems to be.

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NSW Stamp-Duty Crunched

Revenue NSW released their data to end September today. Residential transfers are significantly down on recent trends.

This will put a hole in the state budget. They note:

Data as at 01 October 2019. Report includes all Land Related Transfer Duty documents lodged with Revenue NSW between 01-Jul-2009 and 30-Sep-2019.

Report includes all Land Related Property Sales excluding Fixed Duty and Exemptions (except FHPlus, First Home New Home and First Home Buyers Assistance).

Report is only as accurate as information provided by clients.

Australian Homebuyers Paid Out Over $21 billion In Stamp Duty Last Year

HIA’s Stamp Duty Watch report, released today, reviews the latest developments around stamp duty across Australia’s eight states and territories.

“Australian homebuyers paid out over $21 billion in stamp duty to state governments during the 2017/18 financial year – and the total cost of the tax is expected to get even bigger over the next few years,” explained HIA Senior Economist, Shane Garrett.

“The Report shows that revenue from stamp duty across the states and territories has doubled over the past 8 years. This has added considerably to the cost of buying a home and represents a real setback for affordability.

“The recent set of state Budgets envisage stamp duty revenues increasing by another 11 per cent over the next four years.

“This will involve homebuyers’ having their pockets drained to the tune of $23.1 billion annually by 2021/22 through stamp duty.

“State governments are more dependent on stamp duty than at any time in the last decade. Stamp duty is notoriously unstable and Australia’s largest states are heavily exposed to any downturn in duty receipts should economic conditions change.

“Housing affordability and the sustainability of government finances would both be winners if stamp duty was replaced by better revenue-raising designs. Australian governments really need to tackle this issue once and for all,” concluded Shane Garrett.

Why Stamp Duty Bills are Snowballing – HIA

The HIA says that 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. This result is contained in the latest edition of the HIA’s Stamp Duty Watch report which provides an analysis of state governments increasing reliance housing taxes.

The results also highlight just how much high property prices are helping to stoke state coffers – $20.6 billion in 2016- and the risks attached should this change! A switch to a broader property or land tax might be an option, but is politically risky. This would need to be part of broader property sector reform.

HIA Senior Economist, Shane Garrett says

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. NSW homebuyers fared little better with the stamp duty burden rising from 1.6 per cent to 3.8 per cent over the same period.

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.

In NSW, stamp duty rates have not been reformed since the average house price was $70,000 (1985).

State governments are compounding the housing affordability crisis. Total stamp duty revenues have almost doubled over the past four years: from $11.7 billion in 2011/12 to $20.6 billion in 2015/16 – most of which is likely to have come from residential building. State governments are now more reliant on stamp duty revenues than at any time for a decade. This trend will continue unless state governments recalibrate their taxes on housing.

State governments are increasingly reliant on rising stamp duty revenues. This situation is not sustainable.

The stamp duty burden is increasing under every metric: nominal dollars, real dollars, as a proportion of dwelling prices and as a share of total state revenue. Without reform, this trend will continue.

By draining the pockets of homebuyers to the tune of over $20 billion each year, stamp duty is a central pillar of the affordability crisis. A long plan to do away with the scourge of stamp duty would be a huge victory for housing affordability in this country.