Stamp duty costs home buyers up to six times more than a generation ago

Angus Moore
Angus Moore

New joint e61 Institute-PropTrack research shows just how significant an upfront cost stamp duty is for home buyers. But it wasn't it wasn't always this way: the stamp duty that buyers today pay is far higher than what previous generations paid.

In Sydney, stamp duty on a median-priced home is equivalent to $44,500 or 6 months of average full-time post-tax income. That is 5.4 times higher than it was in the early-to-mid 1980s.

In Melbourne, buyers also need the equivalent of 6 months of full-time income to save $42,500 – a considerable 6.1-fold increase from four decades ago – the largest increase of any city.

While buyers in Brisbane face a lower burden, and owner-occupiers pay even less due to concessions, stamp duty still represents around $25,900 or 3.7 months of income for an investor. For an owner-occupier, it is equivalent to $18,700 or 2.7 months of income – 5.5 times higher than four decades ago.

Adelaide, Perth, and Hobart have also seen increases in the cost of stamp duty. Stamp duty on a median-priced home is 4.4 times higher, relative to income, in Adelaide. It is 4.5 times higher in Perth, and 6 times higher in Hobart.

The rise has largely been incidental, rather than an intentional increase in tax rates. Home prices have grown faster than incomes, and stamp duty brackets have not kept up with growing prices. This process of "bracket creep" means most buyers are paying more stamp duty, relative to the cost of the home, than used to be the case.

This increase in stamp duty matters, stamp duty is an inefficient tax because it discourages people from moving to homes that suit them. That discourages people from downsizing, from moving for work, and makes it harder for first-home buyers to save a deposit.

We can see these effects in what people say about their housing choices. According to a McKinnon poll, housing costs – of which stamp duty is an important part – have caused one quarter of Australians under 40 to delay changing jobs, caused one-in-five in their 30s to push back having children, and prevented people of all ages from moving home.

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