Drift in ‘out of control’ stamp duties is hurting listings and housing affordability: REIA, SQM Research

A new report from the Real Estate Institute of Australia and SQM Research has found that the percentage of Australian homes available for purchase has fallen from 4.5% in 2008 to just 2.5% today, with numbers considerably higher. low in major capitals.

Report author Louis Christopher acknowledged that the numbers were also said to have been affected by a surge in panic enrollments in 2008 as the global financial crisis hit, while the current low enrollment numbers were in part due to prolonged lockdowns. in Melbourne and Sydney.

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“We’re not saying that (the stamp duty) is the only reason, but it seems to be a major contributor,” Christopher said.

“There has certainly been a slippage in the stamp duty bracket. We think this increased the overall cost of the transfer, and we think it would be a pretty big deterrent to moving. “

Research across the country shows that the stamp duty is now 4.2% of the price of a home, up from 3.2% in 2011.

In Victoria, where stamp duties are the highest in the country, the typical Melbourne home tax was $ 20,650 (4.3% of the home’s value) in 2012, but is now $ 44,540 (5.4% of the value of the house).

With average incomes increasing more slowly than median house prices, the stamp duty as a percentage of average incomes rose from 25.1% to 34.3%.

REIA chairman Adrian Kelly said there were a series of factors driving prices up and listing numbers down, including those who feared they would be surprised by Covid-19 lockdowns.

But it’s inevitable to buy a house in Sydney or Melbourne would now cost almost half of the average worker’s annual income in taxes.

He called on politicians to stop treating stamp duties and affordable housing as a matter of electoral mandate and present a 20-year plan that transcends changes of government.

“The housing tax is one of them, but freeing up land and development is another,” Kelly said.

“The creep of brackets for stamp duty is getting completely out of hand.”

The report also shows that the number of properties in Australia has fallen from 8.6 million in 2008 to 9.6 million in the latest estimates, making the drop in the number of homes for sale even more remarkable.

Mr Christopher said he expected there to be a short-term increase in housing listings as Melbourne and Sydney emerge from closures, but in the medium term homebuyers may find that ‘they have even less choice.

“We risk that in the medium term, registrations may decline further from here,” said Christopher.

“Unless we see a whole range of changes needed to ensure affordability. “

SYDNEY

Less than 1% of the city’s homes are for sale, up from 2.5% at the end of 2008, with the most recent peak at 1.9% in November 2018, according to the report.

This represents a drop from 30,000 homes on the market to less than 15,000.

If we add units, the city went from about 2.5% of housing on the market in 2008 to 1.2%.

The typical cost of the stamp duty for a home has increased from $ 22,545 (3.7% of the home’s value) to $ 42,457 (4% of the home’s value) and from $ 17,707 (3, 5% of home value) to $ 28,957 (3.9% of home value) percent of home value) for units.

Average earnings for a Sydneysiders were $ 70,470, but are now $ 91,744.

MELBOURNE

Liquidity in the Melbourne market peaked in 2012, with 3.2 percent of the market (or around 38,000 homes) listed for sale, but is currently at 1.5 percent (around 20,000 homes).

With all properties included, the market has grown from 3.4% in 2012 to 2.1% in August 2021.

The typical stamp duty for a home in Melbourne was $ 20,650 (4.3% of the home’s value) and is now $ 44,540 (5.4% of the home’s value). makes the country most affected by stamp duty.

For units, the figures were $ 17,870 (4.2% of home value) and are now $ 31,370 (5.2% of home value).

Waves for the typical Melburnian went from $ 67,662 to $ 91,109.

BRISBANE

About 5 percent of Brisbane homes were on the market in 2008, but that number is down to 2.5 percent today.

Homes for sale peaked at just over 3.5 percent in 2011, while the number now sits just below 2 percent.

Unit liquidity in the city reached over 8% in 2018 and is still above 6%.

Has the most affordable stamp duty margins in the country, with a typical home costing just $ 6,300 in taxes (1.5% of the home’s value) in 2012, while buyers today pay $ 12 $ 850 (2.1% of the value of the house). For units, the figures are $ 4,410 (1.2 percent of the home’s value) and $ 5,828 (1.4 percent of the home’s value).

The average worker earned $ 68,936 in 2012 and now earns $ 85,831.

Mr Christopher noted that as the most affordable state in the country, and with a range of other benefits, Queensland could attract more buyers looking for a cheaper lifestyle, as rights stamps and house prices continue to rise faster.

ADELAIDE

Liquidity in South Australia’s capital peaked at around 3.2 percent in 2013, but now stands at around 1.7 percent. With homes just below that level for the past eight years.

However, one in 20 units in the city is for sale today, down slightly from 1.3 in 20 for sale in 2019.

A typical house stamp duty bill of $ 15,430 in 2012 was 4 percent of the home’s value, but has risen to $ 22,705 or 4.3 percent of the home’s value today .

Units went from $ 12,180 (3.8 percent of the home’s value) to $ 17,330 (4.1 percent of the home’s value).

A typical year’s salary has increased from $ 64,132 to $ 81,692 over the same period.

HOBART

The capital of Tasmania had 4.8% of its homes available for sale in November 2012 and 1.1% in August this year.

The high water mark for homes was around 4.2% at the start of 2013 and 8% of its available-for-sale units at the start of 2012.

While the middle house attracted $ 11,270 in stamp duty in 2012 (3.3 percent of the home’s value), it’s now $ 22,498 (3.7 percent of the home’s value) . For units, the numbers went from $ 8,302 (3.1 percent of the home’s value) to $ 22,498 (3.7 percent of the home’s value).

Average annual earnings fell from $ 62,239 to $ 79,076 at the time.

But the island state has a persistent problem, with development being constrained by difficulty accessing supplies locally and new construction more expensive as a result, Christopher said.

MOVING FORWARD

Alternatives to stamp duty include a broad-based property tax, sought by the REIA – although it faces opposition from those who fear retirees and retirees will be forced to leave their homes because they cannot pay the annual tax on their land.

In New South Wales, buyers now have the choice of paying stamp duty up front and paying property tax annually.

The Victoria government has apparently backed stamp duty in the near future in its latest budget, raising taxes on homes worth over $ 2 million.

The federal government also considered including housing in the GST when implementing the tax, but Kelly said the idea was unlikely to gain support today.

“But something has to give,” he said.

“All prime ministers need to come together and come up with something better than what we have now, especially for first-time home buyers.”

The report cites previous research from Deloitte Access Economics which found that removing the tax would lead to an initial increase in sales of 30% and a 60% increase over three years.

The Federal Productivity Commission also recommended a broad-based property tax based on the unimproved property value paid annually, rather than the initial tax burden.

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Originally published as ‘out of control’ creep of the stamp duty bracket hurts listings and housing affordability: REIA, SQM Research