New South Wales (NSW) Treasurer Dominic Perrottet recently announced changes to the state’s stamp duty system, making NSW the first state or territory in the country to index Stamp Duty brackets to Consumer Price Index (CPI).
Part of the reform is adjusting for inflation the seven value bands that identify the amount of stamp duty shouldered by buyers.
“We haven’t seen any significant action on Stamp Duty brackets since 1986 when the median house price in Sydney was $100,000, now it has climbed to $1 million,” Perrottet said.
He noted that the change was the most essential in a generation, with the current system having remained largely unchanged for over 30 years.
“Pegging stamp duty to CPI will reduce the tax burden on homebuyers allowing them to put more money towards a deposit.”
This news was positively received by the Property Council of Australia. The industry group acknowledged that the indexation of rates will allow first home buyers, up sizers and right sizers to enter the market easier, albeit there will be minimal savings in the early phases.
Despite the cooling housing market, housing affordability remains a serious short and long-term issue for the state.
Additionally, Property Council NSW Executive Director Jane Fitzgerald shared why the change in stamp duty is a significant piece of micro economic reform for NSW.
“In 1986, stamp duty on a median home would have been approximately $1,931 or 1.96% of the house price,” she said.
“The highest bracket then, applying to homes over $300,000 was never intended to affect the average home purchaser, it was meant to only apply to ‘premium’ homes. Nowadays, in Sydney it’s the exception rather than the rule that you avoid the top rate.”
For reference, stamp duty adds almost $50,000 to the purchase of the average property in Sydney this year.
