New data from the Housing Industry Association (HIA) shows that the overall proportion of state government revenue coming from stamp duty on property purchases is the highest it has been for ten years.

The data is contained in the HIA’s latest quarterly ‘Stamp Duty Watch’ report. Highlights:

• The dependence of Australia’s states on stamp duty revenue has increased significantly in recent years. During 2015-16, stamp duty accounted for 26.1 percent of total state tax revenues – the highest share since 2008-09. Stamp duty dependence is highest in Victoria (30.0 percent) and NSW (28.1 percent).

• During December 2017, the typical stamp duty bill faced by owner occupiers across Australia was $20,587, adding an average 3.1 percent to the dwelling price.
• Stamp duty bills eat into homebuyer deposits, requiring them to settle for smaller homes or else take on bigger mortgage loans. In this way, stamp duty increases mortgage repayments by $1,247 per year – equivalent to over $37,000 over a 30-year loan term.

• Based on December 2017 prices, typical stamp duty bills were highest in Victoria ($31,970), NSW ($25,190) and the Northern Territory ($20,805). Stamp duty bills are typically lowest in Queensland ($7,175) on a median price dwelling.
• Dwelling prices usually increase over time but governments adjust stamp duty price brackets very infrequently. This is the problem of ‘bracket creep.’ As a result, the burden of stamp duty has grown heavier in most states including NSW, Victoria, SA, Tasmania and the NT.
• Stamp duty on foreign investors has been increased over the past 12 months. For the purchase of a median-priced unit, the bills are particularly high in Sydney ($91,115) and Melbourne ($74,524). Such excessive taxes risk hampering the effective operation of rental markets around the country.

“Stamp duty bills have increased almost three times faster than house prices since the 1980s,” said HIA Senior Economist, Shane Garrett. “This trend will continue unless stamp duty is reformed

“In Victoria, the typical stamp duty bill increased from 1.9 percent to 5.2 percent of the median dwelling price between 1982 and 2017 – equivalent to a surge of 4000 percent in the cash value of stamp duty. NSW homebuyers fared little better, with the stamp duty burden rising from 1.6 percent to 3.8 percent over the same period.

“Increases in home prices cause stamp duty bills to accelerate because stamp duty rate brackets are rarely updated. This is the problem of stamp duty creep. In NSW, stamp duty rates have not been reformed since 1985, when the average house price was just $70,000,” said Mr Garrett.

“State governments are compounding the housing affordability crisis. Total stamp duty revenues have almost doubled over the past four years: from $11.7 billion in 2011-12 to $20.6 billion in 2015-16. Most of this is likely to have come from residential building.

“State governments are now more reliant on stamp duty revenues than at any time for a decade. This trend will continue unless they recalibrate their taxes on housing. This situation is not sustainable. The stamp duty burden is increasing under every metric: nominal dollars, real dollars, as a proportion of dwelling prices and as a share of total state revenue.

“By draining the pockets of homebuyers to the tune of over $20 billion each year, stamp duty is a central pillar of the housing affordability crisis. A long plan to do away with the scourge of stamp duty would be a huge victory for housing affordability in this country,” he said.