A new study found that the controversial stamp tax was a key contributor in the decline of housing supply.
Since last year, the national property listings have fallen. They currently stand at just over 200K which is the lowest SQM record.
The current listing count was considerably lower than that of 2011-2019 which averaged between 300,000. and 380,000 listings.
Additionally, 2.5% of all residential properties were available for sale starting at 4.5% in 2008.
Louis Christopher, the managing director of SQM Research stated that listings are declining despite steady increases across Australia in total dwellings over different housing cycles.
“While there maybe various reasons for this situation, we believe stamp duty bracket creep is a leading contributor,” he said.
“When transaction costs of transferring properties disproportionately rise compared to dwelling prices and incomes, then that must be a massive disincentive for property owners to move house.”
Housing affordability is declining
Adrian Kelly, President at REIA, shared the same sentiments on stamp duty. Kelly said that stamp duty still discourages housing activity.
“Stamp duty remains a prohibitive tax for all buyers, adding tens of thousands of dollars to the purchase of a home – for empty nesters, paying tens of thousands of dollars on a home they may only need for five years means less properties will be placed on the market,” Mr Kelly said.
Kelly believes that state and territory governments have increased their financial resources at the expense housing affordability.
He stated that stamp duties as a percentage of average national earnings rose to 34.3% in the past decade, from 25.1% back then in 2012.
Stamp duties can account for nearly half of an annual income in Sydney and Melbourne.
In many capital cities, transfer duties have risen in 2011-2021 due to rising prices.
Kelly stated that the first-home buyer was most vulnerable as they were required to borrow more money to pay higher stamp duty and cover higher house prices.
He stated that home buyers could save $21,000 on average if they had the current median income, higher housing prices and stamp duty at 2012. Victorians would be able to save $35,000, which is half the annual median Australian salary.
It appears, however, that the market is already feeling the negative effects from skyrocketing home values.
CoreLogic’s most current data indicated that Australia’s monthly house price growth stalled at 1.5% in SeptemberThere are indications that the pace of change may be slowing.
The Australian Bureau of Statistics released the most recent figures, showing that total housing loans fell by 4.3% in August. This is the largest fall since May 2020.
The decline was driven by retreating owner-occupiers — the segment reported a 6.6% decrease in financing commitments during the month.
If it wasn’t for 1.5% more investor loans, the overall home financing commitments would have fallen further.
Shane Oliver, chief economist at AMP Capital, said that abolishing stamp duty was one of the most important policy states and territories could consider to reduce affordability.
“Policies that are less likely to be successful include grants and concessions for first home buyers, as they just add to higher prices,” Mr Oliver said.
“Abolishing negative gearing would just inject another distortion in the tax system and could adversely affect supply.”