Stamp duty reform critical for Perth homebuyers after exponential growth

Perth homebuyers are now spending the equivalent of three months’ pay on stamp duty, compared to only three weeks’ pay a generation ago, prompting calls for urgent reform. New joint research by PropTrack and e61 shows today’s buyers to pay $22,500 for a median-priced home of about $600,000, which is the equivalent of three months’, post-tax, full-time income. The figure is 4½ times higher than stamp duty in the early-to-mid 1980s, when owner-occupiers paid $900 or 0.7 months of full-time post-tax income. The growth reflects the exponential growth in house prices compared to salaries in recent decades. PropTrack Senior Economist Angus Moore said stamp duty was highly unpopular and reform was critical. “This burden has increased enormously compared to a generation ago,” he said. “The rise has largely been incidental, rather than an intentional increase in tax rates. Home prices have grown faster than incomes, and stamp duty brackets have not kept up with growing prices.” Research manager at the e61 Institute Nick Garvin said the high cost was contributing to housing affordability and availability crisis, which was one of the key challenges of our time. The Proptrack and e61 report said about a quarter of all potential downsizers were not moving into smaller homes because of stamp duty costs. “In a housing shortage, downsizing benefits everybody,” the report said. The report shows Perth has experienced the smallest increase in stamp duty compared to pay of all State and Territories, which largely reflects that WA’s average pay is higher than other States, thanks to the resource sector. In Sydney, stamp duty costs are currently the equivalent of six months’ pay, growing about 5½ fold as a proportion of wages since the 1980s. Melbourne buyers also need the equivalent of six months of full-time post-tax income, following a six-fold increase. The Real Estate Institute of WA has long campaigned for stamp duty reform, but this has been rejected by successive governments.