21 Dec 2010

How Much is Your State Charging?

Stamp duty costs, which are paid on both the purchase and the mortgage amount, are soaring according to the second Residential Stamp Duty Report from home loan lender Bankwest.

The report reveals that over the last five years stamp duty levels in Australia have increased by 36 per cent and Victorians are being hit the hardest.

Residential stamp duty for buying the typical Australian house is now $14,761.

Victoria has leapfrogged over New South Wales and now can ‘proudly’ hang its shingle as the state with the highest stamp duty costs in the country.

BankWest senior analyst Tim Crawford told the ABC: “Across Victoria as a whole, we’ve seen a 38 per cent increase in the typical stamp duty bill over five years and the typical bill in Victoria is pushing towards $20,000.” he said.

“In Melbourne we’ve seen a 76 per cent increase in the median stamp duty bill over five years.”

This translates as Melbourne home buyers having to set aside four and a half months worth of their average household income to pay for stamp duty on a median priced house.

The new Liberal Government in Victoria campaigned on the issue of stamp duty and is currently preparing to cut stamp duty for first home buyers. Thereby reducing it by around 50 per cent on a median priced house in Melbourne.

Melbourne buyers have the highest residential stamp duty bills of any Australian capital city with median stamp duty bills pushing through $30,000 to $30,620.

This is four times the stamp duty burden of median houses in Brisbane, which enjoys the nation’s smallest bill of $7,245.

Triggering the surging stamp duty is the booming Australian property market, which has delivered yet another blow to property buyers who now have to work an average of two months just to pay residential stamp duty, according to the Bankwest research.

Crawford says “bracket creep” is generally to blame for the increases in stamp duty costs. He explains that house prices have continued to increase but most state and territory governments haven’t changed their stamp duty thresholds.

Bankwest Retail Chief Executive, Vittoria Shortt said the sustained rise in stamp duty bills was an ever-escalating burden for home buyers.

“There’s little doubt that stamp duty is among the most unpopular duties a home owner encounters and our research shows they are a significant financial add on to the cost of a property,” Shortt said.

“Most homeowners in capital cities now need to set aside or borrow three months of their household income if they want to move house.

“As a result, many people may be tempted to stay put and renovate rather than move house because of high stamp duty bills.

“All states offer stamp duty concessions for first time buyers and there have been concessions for new home buyers which also helps. But people already in the property market who are looking to upgrade in their area generally face higher bills.”

On a national average, stamp duty payable on the median house is equivalent to 3.3 per cent of the purchase price. By capital city stamp duty is highest in Melbourne at 5.2 per cent of the purchase price for the median house and lowest in Brisbane at 1.6 per cent.

Median residential stamp duty bills by state

Median Stamp Duty Bill $ (Sept 2010)

1 yr % change

2 yr % change

5 yr % change

Stamp Duty as % of purchase price (Sept 2010)

Median House price $ (Sept 2010)

NSW 16,865 5% 14% 20% 3.6% 475,000
VIC 19,690 16% 27% 38% 4.3% 462,000
QLD 5,985 0% 5% 80% 1.4% 421,000
SA 14,630 5% 9% 57% 4.0% 366,000
WA 15,889 0% -8% 30% 3.5% 460,500
TAS 9,730 1% 10% 42% 3.2% 304,500
ACT 22,685 15% 22% 82% 4.2% 538,000
NT 19,430 14% 47% 152% 4.0% 487,500
Australia 14,761 8% 14% 36% 3.3% 441,500

Significant findings

  • Melbourne home owners need to set aside 4.4 months of their annual household income to pay stamp duty for median priced properties, the highest in the nation. Sydney ranks second, at 3.2 months.
  • Brisbane home buyers pay the lowest stamp duty, having to set aside one month’s salary
  • The typical home owner in more than half of capital city local government areas (53%) needs 25% of their annual household income to pay the median stamp duty bill – up from 47% a year ago.
  • Nationally, the typical home owner in 17% of council areas now needs 25% of their household income to pay the charge – up slightly from 16% five years ago.
  • Stamp duty bills has risen by more than 50% in five capital cities in the past five years – Darwin (137%), Canberra (82%), Brisbane (77%), Melbourne (76%) and Adelaide (60%).
  • Western Australia and Victoria are the only states to have raised stamp duty thresholds to match the rise in house prices in the past five years.
  • Queensland has the lowest stamp duty bills as a percentage of median purchase price at 1.4%. Victoria has the highest stamp duty as a proportion of the median price at 4.3%.
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