Australia's stamp duty hike slammed by industry

Australia's Stamp Duty hike last year has been slammed by the property industry.

"Few things have as detrimental an impact as stamp duty on household finances", says the Housing Industry Association, which represents the country's building industry.

According to the HIA, during November 2015, the typical stamp duty bill nationally rose to $19,045 from $17,653 in June, an increase of 7.9 per cent.

The cost of stamp duty is equivalent to almost four months’ worth of earnings, with stamp duty causing mortgage repayments to increase by $1,165 per year, or $34,955 over a 30-year loan term.

"The cost of stamp duty has a significant negative multiplier effect causing a downward financial spiral for households," explains HIA Senior Economist, Shane Garrett. "Apart from the immediate effect of being over $19,000 worse off, stamp duty results in mortgage interest payments increasing by about $15,900."

"Damage from the tide of stamp duty doesn’t stop there," he continues. "Homebuyers have smaller deposits after stamp duty is paid and must bear larger mortgage debt. As a result, significantly higher LMI charges must then be paid. On a standard home purchase of $527,000, stamp duty can push the LMI premium up by another $7,855. If that’s not bad enough, a further layer of mortgage interest is added on top of the LMI premium if it is capitalised."

He concluds that it is an "unacceptable burden" to place on ordinary homebuyers.