Disincentives to downsizing
Transaction costs which can reach almost $75,000 discourage Australians from moving house and create a major impediment to housing affordability, finds new research from the Property Council.
According to new analysis, Sydneysiders can expect to spend $74,815 in stamp duty and other moving costs, while moving is around $10,000 cheaper for Melbournians.
“The biggest cost of moving is stamp duty which you have to pay if you are upsizing or downsizing,” says the Property Council’s chief executive Ken Morrison.
“When you add removalists, conveyancing fees, bank fees and real estate commissions, the figure becomes substantial.”
Morrison says that high transaction costs discourage the efficient use of housing stock.
“It’s another reason we have an issue in our major cities with housing affordability.”
Deloitte Access Economics has found that an additional 340,000 property transactions would occur each year without stamp duty.
Australians currently hold their property for an average of 13 years, but the removal of the stamp duty arrangements would see that fall to eight years.
In NSW, stamp duty has doubled in just six years from $20,000 for the average property to $40,000.
“We are seeing similar lifts elsewhere. If the state governments are serious about housing affordability they can start with stamp duty and planning system reform.”
The NSW Government has promised to make housing affordability a key priority in its May Budget.
While the Property Council says transaction costs act as significant disincentive to downsizers, the Productivity Commission estimates that around 15 per cent of older Australians want to downsize, but are worried about potentially losing their part-pensions.
The Property Council’s report, Unlocking home equity for senior Australians to free up extra retirement income, proposes exempting some proceeds from the sale of the family home when full-rate age pensioners are aged over 75.
“This measure could bring up to ,000 family residences into the market, which would help take pressure off housing prices,” Morrison concludes.
|
|
Median house value (Dec 16) |
Stamp duty |
Other moving |
Total cost of |
|
Sydney |
$991,000 |
$40,085 |
$34,730 |
$74,815 |
|
Melbourne |
$720,000 |
$38,270 |
$26,600 |
$64,870 |
|
Brisbane |
$520,000 |
$16,625 |
$20,600 |
$37,225 |
|
Perth |
$512,000 |
$18,335 |
$20,360 |
$38,695 |
|
Adelaide |
$448,000 |
$18,730 |
$18,440 |
$37,170 |
|
Hobart |
$375,000 |
$12,935 |
$16,2 |
$29,185 |
|
Canberra |
$660,000 |
$21,460 |
$24,800 |
$46,260 |
|
Darwin |
$515,000 |
$25,154 |
$20,4 |
$45,604 |