State Budget has chance to address affordability issue
New research shows stamp duty is the biggest obstacle for older residents downsizing from the family home and is blocking hundreds of thousands of empty bedrooms from being freed-up to ease housing affordability.
The Downsizing Dilemma White Paper, produced by LJ Hooker and Downsizing.com.au, places pressure on state governments across Australia to reduce the state-based stamp duty tax.
The white paper, which is based on a survey of 800 seniors prior to the Federal Budget, found that:
• 70% of respondents are looking to downsize from the existing family home, either now or in the future;
• 89% of respondents had spare bedrooms in their family homes, which would be more likely to be occupied if the property was sold. Indeed, 64% had two or more spare bedrooms and 23% said they had three or more spare bedrooms;
• 25% of respondents however said the cost of moving – including stamp duty on their next purchase – made selling impractical.
Stamp duty adds close to $40,000 to the purchase of a median priced home in Australia’s largest capital cities ($39,950 in Sydney and $37,520 in Melbourne).
LJ Hooker Head of Research Mathew Tiller said state governments had the chance to follow their Federal counterparts and fill in ‘another piece of the affordability puzzle’ in setting their stamp duty imposts.
“Housing affordability hinges on supply, and the Federal Budget announced in May dangled the carrot for our aged community to sell their redundant family homes with less fear of penalty,” he said.
“But federalism requires a dual-tier approach to housing affordability and State stamp duty remains the biggest roadblock to increasing supply in the marketplace.
“About two thirds of survey respondents had two or more spare bedrooms in their houses. By reducing stamp duty costs, the State could not only reward seniors; they could also fill in another piece of the affordability puzzle by freeing up much-needed family homes.”
Under the Federal scheme, seniors aged 65 and over who have lived in the family home for more than 10 years will be able to make a $300,000 non-concessional contribution from the sale of this home to their superannuation. If a couple, both individuals can claim the incentive.
Mr Tiller also pointed out that the reluctance of seniors to sell the family home influenced an 8.9% decline in listings over 2016 and 9.2% fewer sales.*
Amanda Graham, Co-CEO of Downsizing.com.au, said the survey was compelling evidence about the barrier that stamp duty posed to Australians aged over 50 who want to move to more affordable and suitable accommodation.
“It’s clear that the homeowners using our retirement property website are looking for specific stamp duty reductions and incentives so they can downsize out of the family home and into more suitable accommodation specifically designed for their needs.
“The survey shows they are also clearly searching for properties designed to suit people aged over 50, in locations near where they are currently living and close to public transport and shops.”
*CoreLogic RP Data.