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Current home buyers are paying stamp duty that costs up to six times more than it did for the previous generation, according to new joint research by PropTrack and the e61 Institute.
The report, released today, examined the financial impact of the tax on home buyers by comparing stamp duty costs on a median-priced home in major cities against average full-time incomes.
It found that stamp duty equates to around six months of take-home income for the average full-time worker in Sydney and Melbourne, marking a significant increase from the 2000s and up to six times the cost faced by the last generation.
Sydney residents would also need to allocate six months of full-time post-tax income to cover stamp duty costs today, which is 5.4 times higher than what they would have paid in the early-to-mid 1980s.
The increase in stamp duty costs is even more pronounced in Melbourne, the report found, reaching a sixfold increase over the past four decades.
“Stamp duty is an inefficient tax because it discourages people from moving to homes that suit them,” said PropTrack senior economist Angus Moore (pictured left). “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.”
In addition to tracking how much stamp duty costs have increased, the joint PropTrack and e61 report examined survey data to explore how the financial pressures of housing affect major life choices.
Dr Nick Garvin (pictured right), research manager at the e61 Institute, highlighted the broader societal impact of stamp duty, including its influence on employment decisions and family planning.
“Previous e61 research highlighted that preventing job switching can weaken productivity which has flow-on effects on wage growth and inflation,” said Garvin. “Overhauling the current stamp duty system has the potential to alleviate these pressures on individuals and the economy more broadly.”
The report also highlighted how the financial impact of housing costs is causing individuals to hesitate before moving homes, downsizing, or starting families.
“Housing affordability and availability is without a doubt a challenge of our time,” Garvin said further. “Governments and policymakers must consider the unpopularity of stamp duty, and the indirect impacts stamp duty has on various other parts of the economy and people’s lives.”
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