Property stamp duty costs in Australia up almost 8% in six months
Stamp duty taxes on property in Australia have increased by 7.9% in the last six months and the bill is now equivalent to almost four months’ worth of earnings, the latest research shows.
According to the report from the Housing Industry Association in November 2015 the typical stamp duty bill nationally rose to $19,045 from $17,653 in June.
The report also points out that stamp duty is causing mortgage repayments to increase by $1,165 per year, or $34,955 over a 30vyear loan term.
‘The cost of stamp duty has a significant negative multiplier effect causing a downward financial spiral for households. Apart from the immediate effect of being over $19,000 worse off, stamp duty results in mortgage interest payments increasing by about $15,900,’ said HIA senior economist, Shane Garrett.
‘Damage from the tide of stamp duty doesn’t stop there. Home buyers have smaller deposits after stamp duty is paid and must bear larger mortgage debt. As a result, significantly higher LMI charges must then be paid,’ he explained.
‘On a standard home purchase of $527,000, stamp duty can push the LMI premium up by another $7,855. If that’s not bad enough, a further layer of mortgage interest is added on top of the LMI premium if it is capitalised,’ he pointed out.
‘The end result is that the typical stamp duty bill of $19,045 can snowball up to about $50,000 once LMI and mortgage interest are factored in. This is an unacceptable burden to place on ordinary home buyers,’ he added.
‘As state governments rely more and more on revenue from stamp duty, they have been blinded to the obvious consequences of these costs have on prospective first home buyers. Last week’s Productivity Commission report also noted the huge disincentive that stamp duty places on older households wishing to downsize,’ he concluded.
A breakdown of the figures show that buyer in the Northern Territory Shane continued to suffer the highest stamp duty bills at $25,600, followed by Victoria at $24,700 and New South Wales at $23,600.
Queensland continued to offer the lowest stamp duty bills by a comfortable margin at $6,300 followed by Tasmania at $9,300. Stamp duty bills are the fourth highest in the ACT at $18,400, followed by Western Australia at $16,300 and South Australia at $15,400.