One change could make a huge difference to the housing market
AS POTENTIAL home buyers and sellers extrapolate what last night's Federal Budget means for them, there is one thing that will continue to cause them grief - stamp duty.
Two separate studies have found that government charges are dissuading property owners from selling their homes, driving up demand and impacting affordability.
A survey of 2700 home owners by LJ Hooker has found 44% of respondents who wanted to sell their property in 2016 but decided against it cited transaction costs, such as the amount of stamp duty they would pay on their next property, as the reason for staying put.
But the survey found stamp duty could be a major motivator if it were changed. The survey found if stamp duty was lessened, 51% of respondents said they would likely go to market, but that figure increased to 61% of respondents if the charge was scrapped entirely.
A second study, the Corelogic Perceptions of Housing Affordability survey, found while saving for a deposit was the biggest impediment to buying a property, stamp duty came a close second.
Overall, respondents highlight the removal of stamp duty (73%) as being the most helpful strategies to solving the problem of affordability.
Figures show that pent-up demand for property is fuelling property price rises across the country.
According to CoreLogic, nationwide property listings were 8.9% lower in 2016 than the previous 12 months. The reduced level of choice, accompanied by a record low cash rate, resulted in the number of transactions dropping by 9.2% over 2016.
LJ Hooker's survey found 60% of survey respondents who requested a market appraisal last year decided against selling.
"A market update is the first critical step in the selling process. The fact that six out of every 10 people who had a market update, also known as an appraisal, decided against listing suggests there is a deterrent in the selling process,” LJ Hooker head of research Matthew Tiller said.
"When pressed for the reason why they chose not to sell, almost half (44%) indicated the costs involved with selling then buying a new home, including stamp duty, were too high. As stamp duty is pegged by the state governments to property prices, we've seen transactional costs rise exponentially.”
Mr Tiller said the high response rate to "cost of change” such as stamp duty should give state governments "food for thought” during their budget preparations.
"A drop-off in the number of transactions has a bearing on the amount of stamp duties collected by governments and place strains on their programs.”
LJ Hooker network chief Graeme Hyde said while the efforts of governments to increase new supply assisted in improving market affordability, established homes overwhelmingly accounted for the bulk of real estate transactions.
"Home owners are staying in their properties for longer periods of time, which is reducing the necessary turnover of stock. With an increasing and aging population, it's important all market demographics have the confidence to buy and sell in the marketplace to aid sustainability.”