The joint study by PropTrack and research institute e61 found the cost of stamp duty for a median-priced home in Australia’s two largest property markets, Sydney and Melbourne, is around $45,000.
That’s roughly equivalent to six months’ worth of average after-tax income.
In real terms relative to income, the study found stamp duty is 5.4 times higher than it was in the early-to-mid 1980s in the Sydney market and more than six times higher in the Melbourne market.
Stamp duty is an upfront cost purchasers must pay to state and territory governments on property transactions.
'Inefficient tax', study finds
PropTrack senior economist Angus Moore said it's clear the stamp duty burden has increased enormously over the past 40 years.
“While the rise has largely been incidental, rather than an intentional increase in tax rates, reform is critically needed to allow the property market to operate more efficiently," he said.
The research labelled stamp duty an “inefficient tax” as it discourages people moving to houses that better suit their needs.
It can also have indirect impacts on people deciding whether they will relocate to new jobs and even when they decide to have children, the study found.
Capital city comparison
The research found stamp duty costs are around six times higher relative to income in Hobart, and around 4.5 times higher in both Perth and Adelaide.
Stamp duty is around 5.5 times higher in Brisbane, but owner-occupier concessions see buyers pay around $18,700, or just under three months of income.
For investors in Brisbane, the average cost of stamp duty is around $25,900, just under four months of income.
Calls for reform
Mr Moore said the current stamp duty system is in critical need of review.
“Stamp duty is a large upfront cost for home buyers that has to be saved on top of a deposit,” he said.
“Home prices have grown faster than incomes and stamp duty brackets have not kept up with growing [property] prices.”
e61 research manager Nick Garvin added to calls for a system overhaul to alleviate pressure on individuals and the economy more broadly.
"Housing affordability and availability is without doubt a challenge of our time," he said.
"Governments and policymakers must consider the unpopularity of stamp duty and the indirect impacts it has on various other parts of the economy and people's lives."
At the start of 2023, NSW kicked off its 'First Home Buyer Choice' program allowing the choice between paying a land tax or stamp duty.
Around five months later this was scrapped under the new Minns Government, though the stamp duty thresholds were raised considerably.
Most other states also have stamp duty.
With an election later this year in Queensland, the state opposition has said it will raise the stamp duty threshold from the current $500,000.
The median dwelling value in the Sunshine State, according to CoreLogic, was $796,818 in January, which would see a non-first home buyer pay $21,710 in stamp duty.
Photo by Magnet.Me on Unsplash
Ready, Set, Buy!
Learn everything you need to know about buying property – from choosing the right property and home loan, to the purchasing process, tips to save money and more!
With bonus Q&A sheet and Crossword!
