STAMP duty may be one of the least enticing elements of buying a house.
At a time when house prices are already making it impossible for many to enter the market, it’s easy to be cynical about the five-figure sum handed over to the state government purely for going through with one of life’s largest purchases.
But an announcement on Monday by NSW Treasurer Dominic Perrottet that stamp duty brackets would begin to rise with inflation for residential property purchases from mid-2019 might offer some relief.
The Berejiklian government says the changes will cut stamp duty on average home by about $500, rising over time.
In the context of a mortgage running into hundreds of thousands of dollars, it is hardly a game-changer for buyers but the announcement does make NSW the first Australian state to index the brackets.
One of the Property Council of Australia’s regional directors, Anita Hugo, said structural change around stamp duty could address long-term housing affordability.
Ms Hugo points to the last stamp duty bracket review 30 years ago, when the real estate market was a very different beast.
“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,” Ms Hugo said.
“With today’s average house prices ... [all] purchasers are stung with premium rates that affect housing affordability.”
While Ms Hugo asked Mr Perottet to adjust the rates themselves, and a 2011 commission of audit suggested replacing the “most inefficient of NSW state taxes” altogether, the Treasurer argued the change would have made an $8000 difference on a $1 million purchase made today if it had been implemented in the 1980s.
So what will be the impact of the change, however small?
Undoubtedly, there must be some political upside in taking any action that will benefit home buyers.
Given the total sums involved in property, though, it is unlikely to deliver a new wave of buyers suddenly able to enter the market.
Critics, including the Greens who accuse the government of “fiddling around the edges”, are not without a point.
But we should not be too quick to dismiss the significance of the first movement on a government cash cow in more than three decades – at least the first not in favour of the government’s coffers.