Yahoo Finance Major tax that’s six times bigger for young homebuyers
Sydney and Melbourne homebuyers now need to save nearly $45,000 to cover stamp duty costs.
Sydney and Melbourne homebuyers now need to save six months of wages just to cover one “inefficient” government tax.
New research by e61 institute and PropTrack reveals the massive burden stamp duty costs are placing on today’s homebuyers.
The research found that stamp duty costs home buyers up to six times more than a generation ago, creating a significant upfront cost and barrier for those hoping to enter the housing market.
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In Sydney, stamp duty on a median-priced home is now $44,500 - or six months of the average full-time income after tax. That’s 5.4 times higher than it was in the early-to-mid 1980s, relative to incomes.
Melbourne home buyers need $42,500 to cover stamp duty for a median-priced home - equivalent to six months of wages. That’s a 6.1-fold increase from four decades ago and the largest spike of any city.
Brisbane buyers face a lower burden, but stamp duty still amounts to around $18,700 or 2.7 months of income for the average owner-occupier - 5.5 times higher than four decades ago.
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PropTrack senior economist Angus Moore said the stamp duty burden had “increased enormously” compared to a generation ago, with home prices growing faster than incomes and stamp duty brackets failing to keep up with rising prices.
“Stamp duty is an inefficient tax because it discourages people from moving to homes that suit them,” Moore said.
“While the rise has largely been incidental, rather than an intentional increase in tax rates, stamp duty reform is critically needed to allow the property market to operate more efficiently.”
The research also highlighted the indirect impacts housing costs (including stamp duty) are having on people’s lives, with a quarter of Aussies under 40 delaying changing jobs, one in five under 30 putting off having children, and people of all ages stopped from moving home.
“Previous e61 research highlighted that preventing job switching can weaken productivity, which has flow-on effects on wage growth and inflation,” e61 Institute research manager Dr Nick Garvin said.
“Overhauling the current stamp duty system has the potential to alleviate these pressures on individuals and the economy more broadly.”
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