HIA calls for reform amid concerns stamp duty is stalling new housing supply
Stamp duty charges are placing a substantial financial burden on Australian homebuyers and deterring investment in housing construction, according to a new report by the Housing Industry Association (HIA).
The latest edition of the HIA’s Stamp Duty Watch has highlighted the impact of stamp duty on housing affordability, revealing that borrowers in New South Wales, Victoria and South Australia who finance their stamp duty through a mortgage can incur more than $40,000 in additional repayments over the life of their loan.
HIA senior economist Tom Devitt (pictured) said stamp duty imposed by state governments was creating significant long-term costs for buyers, particularly when financed over a 30-year loan term. In Victoria, a typical home priced at $729,000 attracts around $38,810 in stamp duty. If added to a mortgage at an average variable interest rate of 6.55%, this leads to an extra $48,229 in interest – taking the total burden above $81,000.
The national average cost of borrowing stamp duty on a median-priced home sits at approximately $38,786 on top of a base duty amount of $31,211, the report found.
Queensland remains the lowest-cost jurisdiction for stamp duty, with a 2.7% charge translating to $21,220 for a $786,000 home. Borrowing that amount could add about $26,370 in interest over 30 years.
Devitt also pointed to the broader economic effects, arguing that these costs limit household spending and investment capacity. He warned that some buyers are being forced to compromise on location and home features, which can lead to longer commutes and environmental impacts.
The report also raises concerns over the influence of stamp duty surcharges on foreign investors. Reardon estimated that since 2015, when most states introduced additional charges for overseas buyers, the construction of more than 500,000 new homes has been lost – mainly in the multi-unit sector. This has contributed to a tightening rental market, with annual rent increases running between 5% and 15%, compared to a projected 2% to 3% had those dwellings been built.
Foreign investment in residential real estate has fallen sharply, from $60.8 billion in the 2014-15 financial year to just $6.6 billion in 2023-24, according to Foreign Investment Review Board (FIRB) data. The first quarter of the current financial year recorded only $1.3 billion in approved foreign residential sales.
The HIA is calling for coordinated reform of stamp duty to support housing supply and affordability. Without changes, HIA chief economist Tim Reardon said, the federal government’s target of building 1.2 million new homes by mid-2029 under the National Housing Accord is unlikely to be met. A separate report by the National Housing Supply and Affordability Council has forecast a shortfall of 262,000 homes if current building rates persist.
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