STAMP duty may be one of the least enticing elements of buying a house, often a five-figure sum handed over purely for going through with one of life’s largest purchases.
In an era when affordability is on the precipice for many entering the market, it is not unlikely that some buyers view it as cynical revenue raising on the part of government.
Those will be among those most enthused by NSW Treasurer Dominic Perrottet’s announcement on Monday that stamp duty brackets will begin to rise with inflation for residential property purchases from mid-2019. The Berejiklian government argues the changes will cut the average amount of stamp duty per transaction by about $500 two years later, a saving expected to rise over time. In the context of a mortgage unlikely to be less than hundreds of thousands of dollars, it is perhaps not a game-changing amount. It will cost the state budget about $185 million in three years, but also makes the state Australia’s first to index the brackets. The Property Council of Australia’s regional director for the Hunter, Anita Hugo, said structural change around stamp duty could address long-term housing affordability in the region.
Ms Hugo points to the last stamp duty bracket review 30 years ago, when in 1986 the levels that she estimates today reap about $9 billion for the NSW government were set. “The highest bracket then, applying to homes over $300,000 was never intended to affect the average home purchaser, it was meant to only apply to premium homes,” Ms Hugo said on Monday.
“With today’s average house price in Newcastle well above this at around $600,000, purchasers are stung with premium rates that affect housing affordability.”
While Ms Hugo asked Mr Perottet to adjust the rates themselves, and a 2011 commission of audit suggested replacing the “most inefficient of NSW state taxes” altogether, the Treasurer argued the change would have made an $8000 difference on a $1 million purchase made today if it had been implemented in the 1980s.
In a twist of fate, the change arrives days after this newspaper reported Newcastle’s median house price had fallen 1.1 per cent to $571,000 in October. That change last month was more pronounced in Newcastle than in either Sydney or Melbourne. Agent Scott Walkom attributed to weaker buyer confidence and hardships gaining approval for finance.
Undoubtedly, the change is at least partly driven by the political upside of taking action that will benefit home buyers. Given the total sums involved in property, it is unlikely to deliver a new wave of buyers suddenly able to enter the market. Critics, including the Greens’ accusation of “fiddling around the edges”, are not without a point. But it should not neglect the significance of the first movement on a government cash cow in more than three decades, and it is not in favour of the government’s coffers.