The DEATH KNELL for mortgage duty
South Australian homebuyers will get some relief from hefty property taxes with the State Government announcing it will abolish mortgage stamp duty from January 1, 2006.
The Real Estate Institute of South Australia (REISA) Inc has lobbied long for changes to the state’s property taxation structure; and this is an important step toward a fairer system for homebuyers.
Cutting mortgage stamp duty brings South Australia in line with other states and territories. Victoria, Northern Territory and the ACT have already abolished mortgage stamp duty.
The abolition of the duty will save SA homebuyers hundreds of dollars. However, it will not relieve them of the thousands of dollars they will still have to pay in stamp duty on conveyances.
For example, a person who buys a house for the current median price in Adelaide ($270,000) will save $934 on mortgage duty. However, he or she will still need to pay $9,905 in stamp duty, plus a Lands Titles Office fee of $1,362.
The decision to abolish mortgage duty will cost approximately $230m in lost revenue over the next four-and-a-half years. But the State Government collected an additional $273.3m in stamp duty revenue in 2003-04 alone.
One of the institute’s key concerns is bracket creep – that is, stamp duty rising at a rate disproportionate to the rise in house prices.
For example, a house purchased in 2000 for the median house price in Adelaide at the time ($136,000) would have attracted a stamp duty fee on conveyance of $4,270.
Today, the stamp duty on conveyance on a house purchased for the median price of $270,000 is $9,905. The increase in house price is 98 per cent, while the increase in stamp duty is 131 per cent.
REISA is lobbying the Government to review the brackets at which stamp duty applies to correlate with current house prices. The brackets have not been reviewed for some years.
When the brackets were last reviewed, the Government imposed a higher rate of stamp duty on properties purchased for more than $200,000.
March quarter stats confirm confidence in SA property market
House prices in South Australia remained steady during the first quarter of 2005, with the median house price increasing by 1.2 per cent to $250,000.
Official government statistics show the Adelaide metropolitan area stabilized at a median of $270,000 this quarter (0 per cent growth), while country areas were the star performers with a 4 per cent rise to $182,000.
The figures indicate South Australians’ confidence in the local market and prove the housing market is secure. Adelaide, unlike the eastern capitals, has not experienced any negative growth over the past year.
The metropolitan area has instead recorded an 8 per cent rise in house prices over the 12 months from March 2004.
Suburbs such as Belair, Banksia Park and Campbelltown have performed well and maintained solid growth over the past year. Their median house prices increased 34.4 per cent, 31.3 per cent and 20.9 per cent respectively.
Rural and regional SA’s median house price increased by 13.7 per cent from this time last year, with all major regional centres recording growth over the past 12 months.
The towns of Port Pirie and Port Augusta had big jumps – their medians rose by 40 per cent and 28.6 per cent respectively.
And the Riverland towns of Renmark and Berri recorded price rises of 32.2 per cent and 25.8 per cent respectively. These towns have now passed the $150,000 mark, and their sales volume has been very strong as well.
The continued strength of the rural and regional property markets is a great reflection on their communities and robust economies.
One should be confident in buying property throughout South Australia, with its ability to keep moving forward as it stays affordable.
