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Steven Cross
Stamp duty is the main reason Australians are holding onto their homes for two and a half years longer than a decade ago, according to one industry professional.
Length of home ownership in Australia has risen from 6.8 years in 2002 to 9.3 years in 2012 but according to Laing+Simmons general manager Leanne Pilkington, archaic stamp duty laws is stifling turnover.
“Clearly Government greed has manipulated what began as a menial administrative charge,” Ms Pilkington told Real Estate Business.
Stamp duty originated as a means of recouping the administrative costs of literally stamping and filing documents relating to the transfer of property.
According to Ms Pilkington, the rate of stamp duty in New South Wales hasn’t changed since 1986, when the median house price in Sydney was less than $100,000.
“Now that median price is around the $650,000 mark, translating to a stamp duty amount that is simply out of reach for many buyers and an obvious barrier to market activity.”
The Real Estate Institute of NSW (REINSW) said last year that a cut to stamp duty of as little as 0.5 per cent could boost state revenues by hundreds of million dollars through aggressive stimulation of the property market.
“The research clearly shows that the reduction or removal of stamp duty has a dramatic influence on housing transactions, with the increase in activity also leading to significantly increased government revenues,” Ms Pilkington said.
“This has occurred elsewhere in Australia, notably Western Australia and the Northern Territory, which saw a spike in Government revenues from housing transactions as the property transfer tax was reduced.”
Between 2003 and 2006, Western Australia reduced property transfer duties by 0.9 per cent which saw related revenues increase by more than $709 million over the same period.
Similarly, in the Northern Territory, property transfer duty was cut by 0.45 per cent resulting in an increase of over $22 million in related revenue.
In last year’s budget, the ACT Government committed to phasing out stamp duty over the next 20 years.
