Transaction costs: a big impediment to housing affordability
New research from the Property Council shows that Australians are paying tens of thousands of dollars when they move house creating a major impediment to the efficient use of Australia’s housing supply.
“The biggest cost of moving is stamp duty which you have to pay if you are upsizing or downsizing. Then when you are on removalists, conveyancing fees, bank fees and real estate commissions, the figure becomes substantial”, said Ken Morrison, Chief Executive of the Property Council of Australia.
“The danger of high transaction costs is that it discourages the efficient use of housing stock. It’s another reason we have an issue in our major cities with housing affordability.
“With the transaction costs of selling being more than $74,000 in Sydney and $64,000 in Melbourne, we can assume there are tens of thousands of family homes not in the market simply because of the transaction costs.
“In NSW, for example, 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 as well as reform planning systems.
“In our major cities, we have tens of thousands of older couples who see no financial reason to downsize. In so many of these properties, instead of a family occupying a three or four-bedroom residence, it is just one or two people.
“Our proposal to help pensioners over the age of 75 to downsize could potentially bring up to 50,000 family residences into the market, which would help take pressure off housing prices”.
Research undertaken for the Property Council by Deloitte Access Economics has found that Australia would witness an additional 340,000 property transactions a year without stamp duty.
“We know state budgets cannot afford such a step but it does highlight how stamp duties and other fees inhibit the efficient use of housing.
Australians currently hold their property for an average of 13 years, but the removal of the stamp duty arrangements would see that fall to 8 years.
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