The Property Council of Australia has urged the State Government to review stamp duty as new analysis reveals Melbournians would need to save on average for thirteen years just to cover stamp duty expenses.
With the average Australian saving roughly 6 per cent of their total income, skyrocketing stamp duty is making it more and more challenging for buyers looking to move or upsize.
According to Cressida Wall, Victorian Executive Director, Property Council of Australia, the problem for Victorians is that stamp duty brackets haven’t been reviewed for over 10 years, whilst house prices have continued to balloon, significantly increasing the rate of duty payable.
“Stamp duty has increased by 17.9 per cent as a percentage of yearly income in the last 5 years. This means the average Melbournian now has to pay, on average, an additional 9 weeks of salary to cover the inflating cost of stamp duty,” said Ms Wall.
“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.”
In 2008 when the brackets were last set, the median Melbourne house price was $425,000 and was subject to approximately 4.1 per cent duty, or roughly $17,620. Today, it has more than doubled to $882,000, meaning the average home sale now incurring 5.4 per cent stamp duty or $47,990, just one per cent shy of the top stamp duty rate of 5.5 per cent.
The problem is wide spread; suburbs like Frankston, Sunshine, Carrum and Glenroy are equally impacted, with stamp duty repayments costing on average $36,147, which is equivalent to 37 weeks of full wages based on average incomes in those suburbs.
According to the Property Council, 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 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.”