Stamp duty revenue across Australia almost doubled in past four years, according to HIA

The amount of stamp duty paid by homebuyers across Australia almost doubled in the past four years, totalling a massive $20.6 billion by 2015-16, according to a new report.

The latest Stamp Duty Watch report released by the Housing Industry Association (HIA) showed stamp duty bills were snowballing due to high property prices in hot markets such as Victoria and New South Wales.

The figures found the typical stamp duty bill in Victoria increased from 1.9 per cent to 5.2 per cent of the median dwelling price between 1982 and 2017.

That’s growth at three times the pace of house prices in 35 years.

Homebuyers in New South Wales fared marginally better with the stamp duty burden rising from 1.6 per cent to 3.8 per cent over the same period.

HIA senior economist Shane Garrett renewed calls for stamp duty reforms as he said the tax was compounding the housing affordability crisis in cities such as Sydney and Melbourne.

The current problem of stamp duty bracket creep is that the model no longer discerns a million-dollar home as the median house price in Sydney.

In some states, stamp duty rates have not been reformed since the average house price was sitting around the $70,000 mark in 1985.

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“It was designed traditionally for people who bought more expensive houses to pay more tax, which isn’t an unreasonable situation normally,” Mr Garrett said.

“The model absolutely needs to be updated but state governments have a lot to gain to not update it,” he said.

But according to its budget review mid-financial year, the NSW government expects a near $650 million decline in stamp duty revenue this year.

“A moderation in property prices and stamp duty receipts were factored into the 2017 budget,” NSW acting treasurer Victor Dominello said.

Residential stamp duty revenues made up 9 per cent of total revenues for the NSW government.

“The high take-up rates on the stamp duty concessions within the first home buyer package are welcome news.”

Professor Hal Pawson from UNSW’s City Futures Research Centre said a broad-based land tax would be a more efficient and fairer method of revenue-raising from homeowners.

“Firstly, it encourages more productive use of property and the land. If you’re paying a land tax that will be set according to the size of your home or the amount of land your home is on,” Mr Pawson said.

He said it also encouraged baby boomers to downsize as well as encouraging developers to develop and release land quicker instead of holding on to enormous amounts in land banks, waiting for property values to rise.

“It would discourage speculation and in fact would help moderate property prices,” Mr Pawson said.

The idea is not a new one and would ideally be a medium-term strategy, similar to what the ACT government is already in the process of implementing over 10 years.

Mr Pawson said that while stamp duty was a problematic tax for several reasons, including being a drag on the economy and restricting labour mobility, it couldn’t be abolished overnight.

But he also cautioned against the idea stamp duty was worsening housing affordability, describing it as somewhat of an “economic illusion”.

He said if stamp duty was removed, it would result in prospective buyers using the money to bid higher, raising prices.