Australian homebuyers are spending up to half a year’s worth of income on stamp duty
Stamp duty on median-priced homes in Sydney worth six months of average full-time wages. Image: Canva.
  • Stamp duty poses significant financial obstacles for Australian homebuyers, reaching up to half a year's income.
  • Research reveals steep increases in stamp duty costs, particularly impacting buyers in eastern capitals.
  • Stamp duty reform is urged due to its adverse effects on housing affordability and economic productivity.

Stamp duty has been a substantial barrier to homeownership for the nation’s home buyers, a cost that has skyrocketed over the past generation, according to new joint research by the e61 Institute and PropTrack.

Stamp duty equivalent to around half a year’s income

The research found that stamp duty increases were worse in the nation’s eastern capitals. Stamp duty on median-priced homes in Sydney stood at $44,500, or six months of average full-time, post-tax wages, 5.4 times more than the cost in the early-to-mid 1980s.

Meanwhile, Melbourne buyers had to pay $42,500 in stamp duty, a 6.1-fold rise from four decades ago, the most significant increase of any capital.

Though buyers in Brisbane faced lower costs, with owner-occupiers benefiting from concessions, stamp duty still translated to $25,900, or 3.7 months of income for investors.

Owner-occupiers had to pay $18,700- or 2.7 months’ income, a figure 5.5 times more than four decades ago.

Stamp duty as months of income (average after-tax income and a median-priced home)

Stamp duty as months of income
Source: PropTrack and e61 Institute.

Homebuyers in Adelaide, Perth, and Hobart were not exempt from the stamp duty surges. Relative to income, stamp duty on median-priced homes in Adelaide was 4.4 times higher. Additionally, it was 4.5 times higher in Perth and six times higher in Hobart.

The unseen costs of stamp duty

The growing unaffordability of housing, including stamp duty costs, went beyond time and money. For example, survey data found that a quarter of Australians under 40 delayed changing jobs due to housing prices.

Delayed major life decisions

Delayed major life decisions
Source: e61 Institute.

“Previous e61 research highlighted that preventing job switching can weaken productivity which has flow-on effects on wage growth and inflation. Overhauling the current stamp duty system has the potential to alleviate these pressures on individuals and the economy more broadly,” commented e61 Institute research manager, Dr Nick Garvin.

Moreover, housing costs have caused over one in five 30 to 40-year-olds to delay having children.

National weekly asking property prices

Stamp duty was also a substantial financial hurdle for those looking to downsize.

“Stamp duty is an inefficient tax because it discourages people from moving to homes that suit them. While the rise has largely been incidental, rather than an intentional increase in tax rates, stamp duty reform is critically needed to allow the property market to operate more efficiently,” said PropTrack senior economist, Angus Moore.

Potential downsizing deterred

Potential downsizing deterred
Source: e61 Institute.

Experts have argued that downsizing, particularly for older Australians living in homes no longer suitable for their purposes, will allow the nation’s homes, or bedrooms, to be more efficiently purposed.

The most unpopular policy

Opinion polls have found that abolishing stamp duty topped the list of Australia’s housing policy priorities, with over a third of survey respondents picking the option in their top five. Other popular responses, such as lowering land tax, were at least 5% lower.

Australians’ housing policy priorities (for state and territory governments)

Australians' housing policy priorities (for state and territory governments)
Source: e61 Institute.

“Housing affordability and availability is without a doubt a challenge of our time. Governments and policymakers must consider the unpopularity of stamp duty, and the indirect impacts stamp duty has on various other parts of the economy and people’s lives.”

Dr Nick Garvin, e61 Institute Research Manager.




You May Also Like

Townsville’s $200K price mismatch between new and existing homes drives demand into the established home market

Demand for established homes is expected to push prices up, with major local projects also seeing people move to Townsville.

Sydney needs more density, not more sprawl, to solve housing woes

Developing inner Sydney suburbs can enhance productivity, wages, and reduce carbon emissions while conserving land and green spaces.

Australia’s regional property market records quarterly home price rise of 1.2%, outpacing the capital cities

Some of the strongest performers were dotted across Western Australia and Queensland.

Eastern state investors are swarming to Perth’s southwest, drawn by high yields and low prices

Interstate investors rush to claim a slice of Perth’s southwest, as listings plummet below 4000, escalating competition.

Experts Corner by The Property Tribune

Ko & NPA partner to launch several co-owned luxury properties at Mermaid Beach, Gold Coast

Ko's partnership with NPA Projects provides more opportunities to co-own off-the-plan holiday residences, including exclusive Gold Coast properties

Continue reading

Top Articles

Expert tips on how to be a successful property investor

Property expert and buyer's agent, Lloyd Edge, shares his insights.

Australian commercial property update: Industrial and tourism assets lead the pack in trying times

Commercial assets have faced volatility recently, driven by financing changes and demand fluctuations from institutions and funds.

WA has emerged as a property investment hub, and why that's a good thing

Eastern investors chase Perth's affordability, doubling the distance between home and investment in 2023, reveals MCG research.