Stamp duty under the microscope as property group calls for the axe

author-avatar By on June 09, 2020
Stamp duty under the microscope as property group calls for the axe

Photo by Madhav Rajesh on Unsplash

The Real Estate Institute of Western Australia (REIWA) yesterday said the removal of stamp duty will have longer-term effects than building stimulus.

REIWA President Damian Collins said while the federal HomeBuilder grant and WA's own grant will create short-term jobs, the 99% of West Australians who won't get to use the scheme are still "lumbered" with stamp duty when they buy a property.

“While the scheme will have a short-term boost to the economy, post 31 December 2020 we will be back in the same position, with stamp duty blocking upwards of a billion dollars of activity and thousands of jobs annually,” he said.

“With Victoria and New South Wales focused on getting rid of stamp duty, there has never been a better time for WA to also consider its removal to help boost jobs and the economy.”

Last week, the Australian Financial Review reported that the NSW and Victorian State Governments are considering replacing stamp duty with a land tax as an 'opt-in' system.

Currently, based on median property prices, Sydney and Melbourne residents pay around $50,000 in stamp duty.

The Australian Capital Territory has introduced a land tax, and with Canberra's median home price at about $788,000, land tax is around $8,300, split quarterly and payable alongside rates.

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Back to the West, and the WA branch of the Property Council of Australia is supportive of the state's $20,000 grant.

"With no strict income criteria, no price caps or limitation to owner-occupiers or first home buyers, WA families have the opportunity to right-size and avoid the full hit of stamp duty," the Council's WA executive director Sandra Brewer said.

"And as people begin to act to take advantage of the incentives on offer, we expect to see the flow on benefit throughout the WA economy, a rising tide that will float all boats, including business, retail and industrial activity."

However, REIWA cites "numerous studies" that suggest the removal of stamp duty creates significant economic activity, benefiting the WA economy by as much as $1 billion per year.


Disclaimers

The entire market was not considered in selecting the above products. Rather, a cut-down portion of the market has been considered which includes retail products from at least the big four banks, the top 10 customer-owned institutions and Australia’s larger non-banks:

  • The big four banks are: ANZ, CBA, NAB and Westpac
  • The top 10 customer-owned Institutions are the ten largest mutual banks, credit unions and building societies in Australia, ranked by assets under management in November 2020. They are (in descending order): Great Southern Bank, Newcastle Permanent, Heritage Bank, Peoples’ Choice Credit Union, Teachers Mutual Bank, Greater Bank, IMB Bank, Beyond Bank, Bank Australia and P&N Bank.
  • The larger non-bank lenders are those who (in 2020) has more than $9 billion in Australian funded loans and advances. These groups are: Resimac, Pepper, Liberty and Firstmac.
  • If you click on a product link and you are referred to a Product or Service Provider’s web page, it is highly likely that a commercial relationship exists between that Product or Service Provider and Savings.com.au

Some providers' products may not be available in all states. To be considered, the product and rate must be clearly published on the product provider's web site.

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*Comparison rate is based on a loan of $150,000 over a term of 25 years. Please note the comparison rate only applies to the examples given. Different loan amounts and terms will result in different comparison rates. Costs such as redraw fees and costs savings, such as fee waivers, are not included in the comparison rate but may influence the cost of the loan.

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Harrison is Savings.com.au's Assistant Editor. Prior to joining Savings in January 2020, he worked for some of Australia's largest comparison sites and media organisations. With a keen interest in the economy, housing policy, and personal finance, Harrison is passionate about breaking down complex financial topics for the everyday consumer.

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