If the state of New South Wales in Australia eliminated stamp duty on real estate transactions, it is estimated that around 100,000 more Australians would relocate homes each year. Stamp duty, a customary part of purchasing a home in Australia, is automatically deducted when calculating the amount a buyer needs to contribute, affecting the affordability of homes.
The 2010 Henry Tax Review highlighted the inequity of stamp duty, especially penalizing those who most need or desire to move. Research conducted by the e61 Institute examined the impact of stamp duty using real-estate transaction data and a natural experiment, where Queensland increased stamp duty for most buyers by removing certain concessions for owner-occupiers, resulting in a noticeable decline in home purchases and moves.
The study revealed that a one percentage point increase in stamp duty led to a 7.2% decrease in home purchases, affecting purchases of houses and apartments equally, and showing no distinction between urban and regional areas. With NSW stamp duty averaging around 3.5% of the purchase price, eliminating it completely could potentially increase home purchases and moves by 25%. Similarly, in Victoria, where stamp duty is approximately 4.2%, scrapping it might result in a 30% increase in purchases. Stamp duty is highlighted as a significant cost to buyers, especially when it comes to the cash needed for purchasing a property, often causing delays or financial burdens when saving for a deposit.