According to Google Trends, a free tool that indexes search interest over time, more Australians are looking up 'housing affordability' than ever before.
This comes as no surprise. Australians are increasingly worried about getting on the property ladder, particularly as home prices climb in nearly every state. In Queensland, however, people tend to be less worried. The Sunshine State hasn't seen prices skyrocket as drastically as the rest of the nation, allowing residents to enjoy reasonable affordability in residential and commercial markets.
One factor stands to threaten this though: stamp duty. Recent reports from the Australian Bureau of Statistics (ABS) and the Real Estate Institute of Queensland (REIQ) reveal that stamp duty is rising rapidly, leading some to believe the government is taking advantage of the property market. Is reform in order?
Between 2016 and 2017, the Queensland government's take from property sales rose by a staggering $273 million, according to the ABS. Currently, stamp duty is the second-largest contributor to Queensland coffers behind payroll tax, states REIQ.
Many are warning that the duty is rising too fast and the government is becoming too reliant on housing taxes. With the duty climbing three times faster than house prices, experts warn that the tax could eventually become a major burden on future buyers in the state.
As Housing Industry Association senior economist Shane Garrett explains, "Stamp duty bills have increased almost three times faster than house prices since the 1980s and this trend will continue unless stamp duty is reformed."
The current transfer duty scheme in Queensland is as follows:
|Dutiable value||Duty rate|
|Not more than $5,000||Nil|
|More than $5,000 up to $75,000||$1.50 for each $100, or part of $100, over $5,000|
|$75,000 to $540,000||$1,050 plus $3.50 for each $100, or part of $100, over $75,000|
|$540,000 to $1,000,000||$17,325 plus $4.50 for each $100, or part of $100, over $540,000|
|More than $1,000,000||$38,025 plus $5.75 for each $100, or part of $100, over $1,000,000|
Say you purchase a house with a dutiable value of $470,000 – the median sale price in 2017, according to CoreLogic. If you don't qualify for any concessions, duty will be assessed at $1,050 plus $3.50 for each $100, or part of $100, over $75,000. Your total duty works out to $14,875.
For many prospective buyers, tacking an extra $15,000 on a home's price tag is simply unmanageable. So unmanageable, in fact, that certain buyers will be put off completely. This, of course, creates widespread market issues where those looking to upsize, downsize, invest or get on the property ladder are all too hesitant to do so.
As a solution, some – including the REIQ – have proposed abolishing stamp duty entirely. Those in this camp believe that getting rid of stamp duty would boost affordability for all Queenslanders and encourage residential sales. It's important to note that a flurry of activity in the property market could potentially boost the wider state economy significantly as well.
While doing away with stamp duty could be in the pipeline, there are still plenty of opportunities for Queenslanders to purchase affordable property in the meantime. At Ray White Surfers Paradise, our team of experienced agents are committed to helping customers find the perfect home within their budget. To find out more, reach out today or drop into one of our offices.