The Property Council continues to call for stamp duty reform, after new analysis finds Melburnians need to save for an average of 13 years just to cover stamp duty expenses.
The average Australian saves roughly six per cent of their total income, but skyrocketing stamp duty is making it more challenging for buyers looking to move or upsize.
“Stamp duty has increased by 17.9 per cent as a percentage of yearly income over the last five years,” says the Property Council’s Victorian executive director Cressida Wall.
“This means the average Melburnian now has to pay, on average, an additional nine weeks of salary to cover the inflating cost of stamp duty.”
Wall says Victorians stamp duty brackets haven’t been reviewed for more than 10 years. Meanwhile, house prices have skyrocketed, significantly increasing the rate of duty payable.
In 2008 when the brackets were last set, the median Melbourne house price was $425,000 and was subject to around 4.1 per cent duty, or roughly $17,620.
Today, the median house price has more than doubled to $882,000. The average home sale now incurs 5.4 per cent stamp duty or $47,990 – just one per cent below the top stamp duty rate of 5.5 per cent.
“Stamp duty brackets and rates should be reviewed regularly to ensure they appropriately reflect the housing market,” Wall says.
“Currently, 144 Melbourne suburbs have a median house price above a million dollars. A top rate starting at $960,000 doesn’t reflect the reality of Melbourne home prices.”
The problem is widespread. In family-friendly Bentleigh, where the median sale price is $1.33 million, the eye-watering stamp duty of $73,150 will take 56 weeks to pay off.
While first home buyers still flock to Frankston for its affordable $585,000 median house price, those earning the suburb’s average weekly income of $991 will be paying their $30,170 stamp duty costs over 30 long weeks.
Wall says immediate stimulus measures are required to ease housing affordability pressures nationally, but particularly in Victoria where population growth is set to overtake Sydney in the next decade.
“The most recent ANZ/ Property Council Survey predicts residential buyers are returning to the market. However, taxes on investors, low levels of new housing supply and exorbitant stamp duty charges continue to hurt Victorian homebuyers at a time when we should be encouraging their entry into the housing market,” Wall concludes.