While experts often have different takes on the economy, there’s one thing they can agree on: stamp duty will most likely be axed by 2021.
Calls for stamp duty to be axed have been growing since the beginning of the coronavirus pandemic, with the extra tax setting already hesitant home-buyers back up to $100,000.
But according to Finder’s RBA Cash Rate Survey, two-thirds of experts surveyed believe stamp duty will be axed within the next 18 months, with the majority expecting the change to come in 2021.
Graham Cooke, insights manager at Finder, said stamp duty penalised families who were required to move regularly for work, and represented a huge barrier to entry for first home-buyers.
“Stamp duty makes the process of buying a home even harder,” Cooke said.
“Not only do borrowers have to save a 20 per cent deposit, they also need to save well over $10,000 – in some cases more than $80,000 – for a tax that generally cannot be included in your mortgage.”
Cooke said it was an “on-the-spot fine” for home-buyers.
Also read: Will stamp duty really be abolished?
“Putting this tax burden all up front, holds back purchases and dissuades buyers from purchasing frequently,” he said.
REA Group chief economist Nerida Conisbee told Yahoo Finance if government’s moved to axe stamp duty, they would likely implement a land tax system instead.
But she flagged it is difficult to make the switch.
“Canberra is currently in the process but it will take a long time. It would create more stable revenue for governments but the time taken to switch is problematic,” she said.
“Owners who have already paid stamp duty feel like Governments are double dipping if they switch to a land tax system.”
Property expert Michael Yardney believes axing stamp duty would be a “seismic change” and one that could see property prices inflate.
“If you take stamp duty away, you’re going to take away a massive barrier to entry and increase demand for property,” Yardney said.
“This could push property prices higher and create an artificial property bubble as demand soars.”
Yardney also said axing the tax is in the state government’s interest, as a broader land tax system would mean more financial certainty for government revenue.
“They [state governments] love the “rivers of gold” that flow during the boom times, but during the downtimes, there’s less certainty for their budgets, as stamp duty comprises their main income source,” Yardney said.
“Now, rather than a discretionary tax, every single person in Australia is going to end up paying a little extra for broader taxes that bite at everyone’s budget.”
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