Despite surging house prices there’s no appetite for relief on stamp duty

As house prices surge, industry and welfare experts say it’s time to cut South Australia’s prohibitively high stamp duty. But our Treasurer disagrees.

South Australians are the hardest hit of any state when it comes to paying fees for buying a house, sparking fresh industry calls to cut stamp duty and do away with exorbitant lodgement fees.

SA charges the highest residential stamp duty of any jurisdiction in Australia, except the Northern Territory – with a tax of $21,880 on Adelaide’s median house price of $510,000. Business and welfare groups say it is stopping many people from owning a home.

Stamp duty on a $510,000 home is much lower in NSW ($18,285) and Victoria ($16,928). But SA Treasurer Rob Lucas argues with large deficits looming, the State Government has no capacity to provide stamp duty relief.

South Australians also pay a lodgement fee, which jumps as the value of a property increases. Bernie Lewis Home Loans managing director Mark Lewis said in NSW that fee was a flat $146, and while it scales up along with house prices in Victoria, the maximum amount there was $3600.

Meanwhile in SA, the transfer fee on a $510,000 house is $4258.

Mr Lewis said it was time for reform.

“The high rate of government purchase costs in South Australia hinders mobility, particularly in the case where a homeowner changes jobs and cannot afford to move closer to their new place of work because of the punitive costs involved,’’ Mr Lewis said.

“Despite being one of the most affordable states to live in, South Australians are well and truly penalised when it comes to buying a home.’’

Property Council of Australia (SA) executive director Daniel Gannon said property lodgement fees were “plain offensive”.

“It’s another cost barrier when many buyers can least afford it,” he said. “Stamp duty has always been a barrier to home ownership for young people, but it’s also a disincentive for older South Australians ‘right sizing’.”

The Valuer-General’s latest report for the December quarter shows Adelaide’s median house price grew 3.61 per cent for the quarter, and 5.15 per cent over the previous 12 months.

SA raised $817m from stamp duty last year – a figure Mr Lucas expected would rise this year. But he said the Government’s pandemic responses had put significant pressure on the Budget.

“The reality is we’ll be running a $2.5bn deficit this year, $1.5bn deficit next year. We just don’t have the capacity to further add to the deficits we’re running at the moment by further relief on stamp duty,’’ he said.

Mr Lucas said the government had provided relief in terms of a reduction in the cost of water, land tax reform and payroll tax but there was no scope for more cuts.

South Australian Council of Social Service CEO Ross Womersley said more should be done to make housing more affordable. “We will have an even larger number of people, including anyone living on a low or moderate income, who will be in rental accommodation and cannot buy into the inflated market,’’ he said.

Urban Development Institute of Australia (SA) chief executive Pat Gerace said the State Government should join NSW and Victoria in calls for a Federal Government solution to the stamp duty problem.

“Stamp duty is a really bad tax because it doesn’t just hit first homebuyers, but also people at the other end of the market who will stay in homes that are no longer suitable for them rather than losing $40,000 of their nest egg,’’ Mr Gerace said.

Master Builders SA chief executive Will Frogley said long-term stamp duty reform was needed.