It would take Melbournians 13 years to save and cover stamp duty costs, spurring a need for the state government to update its policies surrounding the tax, according to a study by the Property Council of Australia.
The study found that stamp duty brackets in Victoria have not been reviewed for over a decade. The past housing boom sent dwelling prices skyrocketing, increasing the rate of duty payable.
"Stamp duty has increased by 17.9% as a percentage of yearly income in the last five years. This means the average Melbournian now has to pay, on average, an additional nine weeks of salary to cover the inflating cost of stamp duty," said Cressida Wall, Property Council of Australia's executive director for Victoria.
On average, Australians set aside 6% of their total income to cover stamp duties. At this rate it would take them more than 10 years to settle these taxes, hindering them from buying another property or upsizing.
Stamp duty needs to be reviewed
The stamp duty was last set in 2008 when the median house price in Melbourne was $425,000. This price was subject to 4.1% stamp duty, equivalent to $17,620. The median value in Melbourne now sits at $882,000. This means that an average home sale currently incurs a 5.4% stamp duty, which translates to $47,990 in taxes.
"Stamp duty brackets and rates should be reviewed regularly to ensure they appropriately reflect the housing market. With over 80 Melbourne suburbs with a median house price above a million dollars, a top rate starting at $960,000 doesn't reflect the reality of the Melbourne housing market," Wall said.
Homeowners in suburbs like Frankston, Sunshine, Carrum and Glenroy also struggle to cover stamp duty. On average, people living in these suburbs need to shell out $36,147, which is equivalent to 37 weeks of full wages.
"The most recent ANZ/Property Council Confidence Survey has predicted residential buyers are returning to the market. However, disproportionate taxes on international investors, low levels of new housing supply and exorbitant stamp duty charges continue to hurt Victorian home buyers at a time when the government should be encouraging their entry into the housing market," Wall said.
Stamp duty increases in capital cities
Stamp duties in other capital cities also increased considerably. For instance, stamp duty paid on a median-priced home in Sydney more than doubled from $20,919 in 2004 to $42,486 this year.
The table below shows the changes to stamp duties in capital cities:
Stamp duty paid on a median-priced home |
||||
City |
March 2004 |
March 2019 |
Difference |
% increase, 2004 to 2019 |
|
Sydney |
$20.919 |
$42,486 |
$21,567 |
103% |
|
Melbourne |
$15,587 |
$44,002 |
$28,415 |
182% |
|
Brisbane |
$3,816 |
$11,357 |
$7,541 |
198% |
|
Adelaide |
$11,822 |
$23,593 |
$11,770 |
100% |
|
Perth |
$11,415 |
$21,659 |
$10,244 |
90% |
|
Hobart |
$6,164 |
$17,010 |
$10,846 |
176% |
|
Sources: ABS; Domain Group, State Treasury departments |
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