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The number of annual property sales in Western Australia has dramatically dropped from over 71,000 in 2013 to less than 41,000 in 2018, the lowest the state has seen since 1990 and the numbers are only continuing to fall in 2019.
REIWA President Damian Collins said one of the biggest imposts to home ownership is stamp duty, which has significant impacts to first home buyers, right through to seniors wanting to downsize.
“REIWA urges the WA Government and the Opposition to put stamp duty on the agenda at the next state election, as it is costing West Aussies around $20,000* when they purchase their home, which could add up to five years onto the life of a mortgage and can mean many people are unable to buy or move.
“Instead of a large upfront tax bill that requires additional borrowing for many people, an option could be for home owners to pay a much smaller annual fee based on the unchanged property value of their land, which would be spread across many years, creating
a steady stream of reliable income for state and territory governments.
“Best of all, this system would not accrue interest, meaning households only pay the value of the bill received unlike the current stamp duty system, which places the surcharge onto the home loan, accruing interest over the life of the loan,” Mr Collins said.
In the current system, if a family saves $50,000 for a home deposit and is looking to buy a home at the current median house price of $495,000, $17,765 of that deposit will go towards stamp duty.
When you factor in the Lenders Mortgage Insurance cost of $16,010 that hard-working family has now lost almost all of their deposit requiring them to take out a mortgage worth almost 95 per cent of the property value.
“The Productivity Commission and even the CEO of a major bank have called for the end to stamp duty and REIWA congratulates them for speaking up on the issue.
“By moving towards a land-based tax regime, there would be a number of flow-on benefits including providing the government with more income to reinject into the economy. It would allow for greater housing mobility across the community. Households could locate closer to employment and activity
centres, thus reducing congestion,” Mr Collins said.
View more information on REIWA’s stamp duty initiatives.
*based on the purchase of a property at $495,000.