5x as much: Huge home owner tax burden laid bare

Sydney homeowners are being slugged a jaw dropping amount in tax compared to previous decades and the huge burden is being felt well beyond the housing market.

Sydney home seekers are splashing out more than five times as much of their income on upfront property taxes than previous generations.

An alarming new report showed the $44,500 in stamp duty required to purchase a median priced home at $1.11m required six months of the average earners’ full-time post-tax income.

That’s 5.4 times higher than the required income to pay property tax in the early-to-mid 1980s, according to the PropTrack and e61 study released today.

PropTrack economist Angus Moore said the excessive government taxes, coupled with already excessive property prices, were proving a substantial barrier for new homebuyers.

Stamp duty is now costing Sydney siders five times more than in the 1980s, preventing many from buying and selling houses. Picture: Julian Andrews

“Back in the early 1980s it would cost only one month of your total income, today it’s the equivalent of every single dollar of six months of income,” he said.

Housing prices outpacing wages as well as stamp duty bracket creep has meant the cost of stamp duty has covertly doubled since the 2000s.

“Saving a deposit for a first homebuyer is already the biggest constraint when it comes to entering the market costing tens of thousands of dollars,” Mr Moore said. “When you add $45,000 on top of that for stamp duty you are preventing so many new homebuyers from entering the market.

First home buyers already struggling saving a deposit for a house would have to pay the entirety of six months an average salary in stamp duty.

“Some first homebuyers are eligible for stamp duty exemptions, but it caps out at $1m and decreases from $800,000.” he said. “So anyone looking for a median price home (in Sydney) isn’t eligible for concessions.”

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Mr Moore said that urgent stamp duty reform would be needed if the Minns government was serious about addressing the current housing crisis.

The research revealed many Australians were putting off downsizing due to the huge stamp duty cost of buying their next home.

The report calls for stamp duty reform from the Minns Government. Picture: NCA NewsWire / Nikki Short

Despite having empty bedrooms, the amount new stamp duty charges would eat into their potential gains was putting off the process and impacting housing supply, Mr Moore said.

“Stamp duty is deterring close to a quarter of potential downsizers which means people are staying in homes that aren’t serving their needs and putting more pressure on the housing market,” he said.

Nick Garvin, research manager at e61 said the flow on effect of stamp duty preventing people from moving into appropriate housing indirectly impacted more than just real estate.

“Indirect impacts of stamp duty on other parts of people’s lives also include whether or not they change jobs, and when they decide to have children,” Dr Garvin said.

Stamp duty effected peoples decision to change jobs or have kids due to unsuitable housing.

“This then impacts the job market from flowing in the way it normally would, which means there is general consequences on the economy hurts everyone, peoples wages grow at slower rates.”

He said overhauling the current stamp duty system could alleviate pressures on the economy more broadly.

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Originally published as 5x as much: Huge home owner tax burden laid bare