High stamp duty causes problems for first home buyers
Stamp duty rates have risen across the country, with the average rate in some states and territories exceeding $20,000.
According to the Housing Industry Association’s Stamp Duty Watch report, the country’s highest stamp duty rates are found in the Northern Territory, where a median-priced established dwelling attracts $26,235 in stamp duty. High rates were also found in Victoria ($22,620) and NSW ($21,140).
Housing Industry Association economist Shane Garrett said the trend could be directly attributed to rising home values across the country.
“Stamp duty bands and rates do not respond to episodes of strong price growth,” he said.
The rising cost of stamp duty has created a situation where first home buyers are often forced to pay their state government grant back through stamp duty.
For example, a NSW resident purchasing a brand new, $650,000 property as their first home will receive a First Home Buyers Grant of $10,000. However, their purchase will attract stamp duty of $24,740.
It’s a similar story in Victoria and WA, where stamp duty costs also exceed the grant provided to first home buyers of newly-built, median-priced properties.
Garrett said high stamp duty payments were stifling industry growth, and placing an additional financial burden on households.
“Stamp duty holds back new home building activity and has very detrimental effects on home affordability,” he said.
“The tax adds hugely to household indebtedness by forcing monthly mortgage repayments upwards. Reform aimed at reducing the burden of the tax must become a priority for both state and federal governments.”
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