A recent survey of 15,000 West Australians has highlighted what many aspiring homeowners and downsizers already know: stamp duty is a major financial obstacle. Should the WA Government abolish stamp duty? The Real Estate Institute of Western Australia’s (REIWA) Housing Issues Survey revealed that over 60% of respondents see stamp duty as a significant barrier to homeownership.
The Growing Challenge of Affording a Home
Western Australia’s housing market has seen continuous price growth, driven by increasing population numbers and limited building completions. As a result, Perth’s median property price surged by 23.3% to $740,000 in the year leading up to December 2024. For first-home buyers, this makes entering the property market increasingly difficult. According to ANZ, the time required to save a deposit has increased to almost 10 years. The added burden of stamp duty further compounds this challenge. Nearly half of the survey respondents supported raising the first-homeowner stamp duty exemption from $450,000 to better align with rising property prices, while a third were opposed to any change.
The Election Debate: Stamp Duty Exemptions
With the March 8 state election fast approaching, stamp duty reform has become a key issue for both major parties. Labor has pledged to increase the first-homeowner stamp duty exemption to $500,000, while the Liberals have promised a larger increase to $550,000.
REIWA’s chief executive, Cath Hart, has pointed out that stamp duty is not only a barrier for first-home buyers but also for downsizers. Many older West Australians remain in homes that are too large for their current needs due to the high stamp duty costs of moving. REIWA’s election wishlist includes introducing stamp duty concessions for downsizers, a proposal that 71% of survey respondents support. However, Premier Roger Cook ruled out stamp duty breaks for downsizers last June, leaving many in uncertainty.
The Case for Land Tax Reform
Ray White’s chief economist, Nerida Conisbee, has suggested that state governments should consider transitioning from stamp duty to a land tax. She argued that a land tax system would encourage more efficient use of housing stock, promote property development, and reduce speculation and vacant homes. However, such a transition could be challenging, particularly for retirees who bought homes decades ago in now-expensive suburbs and may struggle to pay annual land tax.
The Bigger Picture: Housing Affordability and Market Stability
In theory, switching from stamp duty to a land tax would reduce the initial costs of purchasing a home. For instance, on a $1 million property, buyers would save $50,000 upfront, making homeownership more accessible. However, experts caution that in a supply-constrained market like Perth’s, this could lead to increased property prices, as buyers may stretch their budgets to borrow the maximum amount possible.
Strategic Property Group’s managing director, Trent Fleskens, believes that replacing stamp duty with a land tax could be a smarter system in the long run. He emphasized that the current stamp duty threshold has failed to keep up with rising prices. Five years ago, first-home buyers could purchase half the market without paying stamp duty. Today, buying a median-priced home as a first-time buyer means paying around $30,000 in tax, effectively a windfall for the state government at the expense of young buyers.
Conclusion
Western Australia’s housing market is at a crossroads. Stamp duty remains a significant barrier for many, and with property prices continuing to climb, meaningful reform is more urgent than ever. Whether through adjustments to stamp duty exemptions, targeted concessions, or a shift to a land tax system, addressing this issue is critical to ensuring homeownership remains accessible for both first-home buyers and downsizers. As the state election approaches, housing affordability is set to be a defining issue, and the next government will need to take bold action to make homeownership more achievable for West Australians.
Source: REIWA, Strategic Property Group.
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