Foreign investors paying quadruple in stamp duty

by Miklos Bolza04 Aug 2017
Foreign investors purchasing a home in Sydney are paying almost four times as much stamp duty as locals, new data has shown.

The finding comes from the latest Stamp Duty Watch report released yesterday (3 August) by the Housing Industry Association (HIA).

“Recent changes to stamp duty in NSW mean that foreign investors now pay almost $100,000 in transaction taxes to acquire a standard apartment in Sydney – almost four times as much as local buyers,” said HIA senior economist Shane Garrett.

With foreign investors a vital component of rental supply in major cities such as Sydney and Melbourne, he questioned whether more barriers should be placed in the way of new supply especially in current market conditions.

The study found that when purchasing a median price unit in Sydney, foreign investors paid $93,865 compared with $68,970 in Melbourne and $28,905 in Brisbane.

HIA’s research also found that the average stamp duty bill for resident owner occupiers went up by 16.4% in the 12 months prior to June 2017 to $20,725 despite dwelling prices only increasing by 10.5%.

Broken down state by state, the typical stamp duty bills as of July 2017 were as follows:
  • New South Wales ($25,640)
  • Victoria ($30,470)
  • Queensland ($7,000)
  • South Australia ($16,580)
  • Western Australia ($14,915)
  • Tasmania ($9,335)
  • Northern Territory ($20,994)
  • Australian Capital Territory ($18,249)
“On the owner occupier side, stamp duty drains family coffers of $107 each and every month over a 30 year mortgage term,” Garrett said.
 
“Shelling out so much in stamp duty drains the household piggy bank of vital funds for their home deposit. Families are then forced to take out larger mortgages and incur heavier mortgage insurance premiums.”

HIA also looked at the burden that stamp duty presents on borrowers, finding the percentage of the size of the stamp duty bill compared to the median dwelling price in each market:
  • New South Wales (3.8%)
  • Victoria (5.2%)
  • Queensland (1.6%)
  • South Australia (4.1%)
  • Western Australia (3.4%)
  • Tasmania (3.3%)
  • Northern Territory (4.5%)
  • Australian Capital Territory (3.0%)
Finally, the paper also looked at the additional yearly mortgage repayments resulting from stamp duty in each state or territory. These figures were based on a discounted variable mortgage rate of 4.5% p.a. with a 30 year mortgage term. HIA analysis found that the average Australian household has to pay an additional $1,248 per year thanks to stamp duty with a state-by-state breakdown found below:
  • New South Wales ($1,543)
  • Victoria ($1,833)
  • Queensland ($421)
  • South Australia ($997)
  • Western Australia ($897)
  • Tasmania ($562)
  • Northern Territory ($1,263)
  • Australian Capital Territory ($1,098)
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