Property prices rise as homeowners hold off selling to avoid stamp duty

A dearth of new listings has left buyers in the market with few choices.

The number of homes being offered on the market has been “relatively flat” in recent years. (AAP Image/Jono Searle) NO ARCHIVING

Homeowners are holding on to their homes longer because of stamp duty and selling costs, causing fewer homes to hit the market.

Analysis from PropTrack for The Australian has revealed the number of new homes being offered on the market has been slowly declining over the past decade as total state and territory stamp duty nearly doubled.

A recent dearth of new listings has created a surprising lift in property prices, as buyers who are in the market have few choices.

Most economists and major banks weren’t anticipating a 1.41 per cent increase in property prices over the past three months, with several choosing to revise their outlooks in the past month after the fastest rise in interest rates in a generation failed to stall the market for now.

PropTrack director of economic research Cameron Kusher said listings had remained “relatively flat” in recent years despite more interest from buyers.

“Over the past 10 years, despite a strong rate of population growth and a significant increase in the number of dwellings in the country, there has been an ongoing declining trend in the number of new listings coming to market,” he said. “In recent years, with the lift in new listings through the pandemic, the average number of new listings has been relatively flat.”

The average tenure of ownership in Australia has grown from 9.3 years to 13.5 years through the 2010s as more people choose to stay put. The change coincides with national stamp duty revenue increasing from $12.43bn through the 2010-11 financial year to $23.97bn in the midst of the 2020-21 housing boom.

Revenues from stamp duty and transfer taxes have climbed significantly in NSW and Victoria, and to a lesser degree in Queensland and South Australia.

Mr Kusher said: “The best way to not have to incur these costs is to not buy and sell; of course, circumstances sometimes mean people need to buy and sell properties, but it is beneficial to do so on a less regular basis”.

Real Estate Institute of Australia president Hayden Groves said transactional taxes were distorting the market and causing “blockages” in the sales process. “If you’ve got a market that’s not growing or doesn’t have upward trajectory, those costs factor very large in people’s minds, because they need capital gains to recover those costs,” Mr Groves said.

CoreLogic head of research Eliza Owen described the selling conditions of the Covid-period as “uniquely strong” given the broader economic drivers.

Despite low listing levels, inquiries from potential buyers on realestate.com.au have remained substantially higher than pre-Covid, which will likely prove a challenge to affordability as new building levels hit decade lows.

The number of homes in Australia has increased by nearly a fifth over the past decade, with 1,744,900 dwellings built.