Victorian government attempts to hijack property boom with new taxes
Ahead of this week’s state budget, the Victorian government has flagged several new tax measures targeting property in...
Since the 1980s, stamp duty has increased almost three times faster than house prices, and HIA’s senior economist claims it is the major force behind the housing affordability crisis and is predicting this trend could snowball, with a lot of the blame being placed on state governments.
Shane Garrett’s findings were detailed in the latest edition of the Housing Industry Association’s recently released Stamp Duty Watch report, which outlined the state governments’ increasing reliance on housing taxes.
Mr Garrett said that in Victoria, the typical stamp duty bill increased from 1.9 per cent to 5.2 per cent of the median dwelling price between 1982 and 2017, which is equivalent to 4,000 per cent in the cash value of stamp duty.
He said that NSW home buyers fared a “little better”, with the stamp duty burden rising from 1.6 per cent to 3.8 per cent over the same period.
“Increases in home prices cause stamp duty bills to accelerate because stamp duty rate brackets are rarely updated,” Mr Garrett said.
“This is the problem of stamp duty creep.”
Mr Garrett said that in NSW, stamp duty rates have not been reformed since 1985 when the average house price was $70,000.
“State governments are compounding the housing affordability crisis,” the senior economist said.
“Total stamp duty revenues have almost doubled over the past four years, from $11.7 billion in 2011-12 to $20.6 billion in 2015-16, most of which is likely to have come from residential building.”
Mr Garrett added that this might have led to some dependability issues for the authorities.
“State governments are now more reliant on stamp duty revenues than at any time for a decade. This trend will continue unless state governments recalibrate their taxes on housing.”
He also said that this stamp duty burden is increasing under every metric — nominal dollars, real dollars — as a proportion of dwelling prices and as a share of total state revenue.
“Without reform, this trend will continue,” Mr Garrett said.
“By draining the pockets of home buyers to the tune of over $20 billion each year, stamp duty is a central pillar of the affordability crisis. A long plan to do away with the scourge of stamp duty would be a huge victory for housing affordability in this country.”