News Corp Australia Network

The cost of stamp duty has trebled in Darwin. Picture: Che Chorley

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New research has revealed Darwin homebuyers are forking out three times more for stamp duty than a generation ago, as property industry experts call for stamp duty reform.

Research by PropTrack and the e61 Institute found buyers needed $23,900 – or 3.6 months’ worth of average full-time income – to cover the stamp duty for a median-priced home in Darwin.

PropTrack senior economist, Angus Moore, said that figure was 3.1 times higher than 30 years ago.

“In the 1980s, stamp duty for owner occupiers was $1,850 or equivalent to 1.1 months of full-time post-tax income,” he said.

Mr Moore said across Australian a typical stamp duty payment cost around five months of take-home income, which has doubled since the 2000s.

“Home buyers in Sydney and Melbourne must save nearly $45,000 just to cover the stamp duty for a median-priced home, equivalent to half a year’s worth of average full-time income,” he said

“In the mid-1980s, stamp duty in Sydney was only around $1,500.”

PropTrack economist Angus Moore. Picture: Supplied

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Mr Moore said stamp duty was not only a significant upfront cost but also a barrier to entering the housing market.

“Stamp duty is an inefficient tax because it discourages people from moving to homes that suit them,” he said.

“This burden has increased enormously compared to a generation ago but 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.

“Stamp duty reform is critically needed to allow the property market to operate more efficiently.”

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Bren Rodda, a Darwin-based mortgage broker and director of Loan Market Territory, said stamp duty could force buyers to hold off on purchasing.

“When buyers discover they’ll need another 5 per cent of the purchase price of a property for stamp duty and purchase costs, such as conveyancing, it can hit their budget quite hard,” he said.

“Some customers have had to go back and spend another six to twelve months getting their savings up to cover this additional cost, or have asked their parents for a financial gift.”

Stamp duty adds further financial pressure to buyers looking to purchase a Darwin home. Picture: Glenn Campbell

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Research manager at the e61 Institute, Dr Nick Garvin said their research also highlighted the indirect impacts of stamp duty on other parts of people’s lives, including whether or not they change jobs, and when they decide to have children.

“Previous e61 research highlighted that preventing job switching can weaken productivity, which has flow-on effects on wage growth and inflation,” he said.

“Overhauling the current stamp duty system has the potential to alleviate these pressures on individuals and the economy more broadly.”

Dr Garvin said housing affordability and availability was, without a doubt, a challenge of our time.

“Governments and policymakers must consider the unpopularity of stamp duty, and the indirect impacts stamp duty has on various other parts of the economy and people’s lives,” he said.

Forthcoming joint research from the e61 Institute and PropTrack will quantify the effect stamp duty has on people’s choices to buy, sell, and move.