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A new report has revealed Victorian home buyers pay the highest stamp duty fees compared to any other state in Australia, effectively hurting potential property buyers’ chances of owning a house and escaping the rental market.
According to the Housing Industry Association’s (HIA) latest Stamp Duty Watch Report, Victorian home buyers paid an average of $40,370 in stamp duty in November 2021, which is equivalent to almost 5 per cent of the state’s median property price of $755,000.
In comparison, NSW home buyers reportedly paid an average of $34,807 or around 4 per cent of the state’s median property price.
The disparity was more significant when compared with Queensland, where home buyers only paid $11,005 in stamp duty or 2 per cent of the state’s median property price.
According to HIA executive director Fiona Nield, the hefty stamp duty in Victoria means that the state government pockets more than $40,000 each time a home is sold.
“The tax impost – the highest in the nation – is shattering the homeownership dreams of many Victorians and potentially driving much-needed skilled labour out of the state,” she claimed.
She also slammed the state government for burdening home buyers and the housing industry with layers of tax upon tax, which is putting pressure on all parts of the housing market and are “trapping” Victorians in the private rental market instead of lifting them into home ownership.
Apart from the stamp duty fees, Ms Nield pointed out that Victorian property buyers will also need to shoulder other “punitive” property taxes, which will soon be compounded by the recently announced new social housing tax.
On 18 February 2022, the Victorian government announced that starting 1 July 2024, all newly built developments with three dwellings or more, or of three or more residential lot subdivisions, would need to contribute 1.75 per cent of the market value of the completed project to the Social Housing Growth Fund.
Legislation to support this measure is yet to be passed by Parliament. But Minister for Housing Richard Wynne assured the change would affect less than 30 per cent of all residential planning permits.
“This is an investment in more new homes, more jobs, and more training opportunities for local tradies, with every dollar re-invested in the Victorian construction sector to build more social and affordable homes,” he said.
While several social housing groups have welcomed the proposal, there have been concerns raised that the new tax would cost first home buyers more. Experts speculate that developers will likely pass the cost on to buyers, who are already finding it difficult to overcome the barrier of record-high property prices.
In a previous statement, HIA estimated that the new contribution could add over $6,600 to the cost of land for new homes and potentially be “another hit to housing affordability for all Victorians”.
Ms Nield said that the high tax implications of buying a property in Victoria are not only hurting home buyers but the local economy as well.
“The implications of high stamp duty and high property taxes are being felt across the state, and right across the state’s economy including hampering our ability to retain and attract skilled workers, who are [increasingly] being lured to other states because of more affordable housing,” Ms Nield said.
The expert highlighted that Queensland had been the biggest beneficiary of the exodus from Melbourne as families moved north, where home buyers are paying $30,000 less in stamp duty while also paying substantially less for a property.
“To make homeownership a reality for more Victorians, we must reduce the amount of money they’re paying into the government coffers and increase the amount they’re able to pay towards the cost of a home,” she stated.
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