Economy

Soaring stamp duty costs another turn-off for property buyers

SmartCompany /

It’s been a disappointing weekend for the property market, with every capital experiencing drops in clearance rate results.

It’s been a disappointing weekend for the property market, with every capital experiencing drops in clearance rate results.

But the poor performance might not be totally due to the poor economic conditions, with a new survey revealing first-home buyers are being discouraged by higher stamp-duty taxes on residential properties.

According to the BankWest report, the amount of stamp-duty paid on the median Australian home has jumped 59% over the past five years. But Sydney and Melbourne home owners are the worst off, needing to pay almost an average three month’s worth of salary to pay stamp-duty.

Brisbane enjoys the lowest stamp-duty rates, needing only an average of a month’s salary to pay the tax.

BankWest retail chief executive Ian Corfield says more needs to be done. “This is the downside of the house price boom that has pushed up stamp duty bills and burdened home buyers across the country with an additional tax expense,” he says.

“While first time buyers receive grants and stamp duty exemptions as incentives to climb on to the housing ladder, the incentive for existing home owners is to stay put and renovate, rather than to buy a new house, because of hefty stamp duty bills.

“This could mean lower sales, lower turnover, a flatter market and less choice for home buyers.”

It’s more bad news for an already battered housing market, with auctions struggling again on the weekend.

Melbourne results have continued their decline, with the city’s clearance rates dropping from last week’s 53% to 51%. While 339 properties were sold at $248 million, Real Estate Institute of Victoria chief executive Enzo Raimondo isn’t impressed.

“Despite the significant increase in the number of homes on offer at auction this weekend, the clearance rate… did not differ greatly from last week.”

But Raimondo says the number of auctions will remain high over the next two weeks before the Christmas and new year break.

Sydney rates have continued to decline. This weekend they fell just one percentage point to 47%, with 181 properties selling for a total of $102.2 million.

Brisbane rates also fell one percentage point to 29% with 16 properties sold, while Adelaide suffered a larger drop from 42% to 37%.

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