New South Wales posted a total of $8.382 billion in property tax revenue in 2017-2018— a still-high result despite the cooling market.
Total property tax revenue was recorded at $8.778 billion in Victoria, $5.658 billion in Queensland, $2.433 billion in South Australia, $3.654 billion in Western Australia, $549 million in Tasmania, $133 million in Northern Territory and $705 million in Australian Capital Territory.
“Taking a look at stamp duties, which, although they are no longer defined as part of ‘taxes on property,’ they are a tax paid when a property when is transacted,” said CoreLogic Research Analyst Cameron Kusher. “When the housing market is seeing increased transactions and rises in values, stamp duty generally rises and vice versa. The national housing market started to see values fall late in 2017 and as a result, stamp duty revenue is largely unchanged in 2017-18 from the previous year.”
CoreLogic’s study found that most populous states derive the most revenue from stamp duty. However, figures also showed how volatile revenue from stamp duty could be based on the performance of the housing market.
Over the most recent year, stamp duty revenue fell in NSW, Queensland, South Australia, Western Australia, Northern Territory, and Australian Capital Territory, while it rose elsewhere. With the values and transaction volumes continuing to decline in the national housing market, it is expected that the 2018-2019 financial year will record a much lower value of stamp duty revenue.
Non-transactional based property taxes provide state and local governments with consistent revenue streams year after year, but transactional-based stamp duty is much less guaranteed and more difficult to forecast for budgeting purposes.
Over recent years, as the housing markets in Sydney and Melbourne have flourished, the NSW and Victoria state governments have benefitted greatly from a significant increase in stamp duty revenue. Stamp duty revenue in NSW is up 89.7% over the past five years. In Victoria, revenue is up 116%. “By comparison, in WA where the housing market has largely been falling over the same period, stamp duty revenue is down -18.9%,” CoreLogic said.
“With the NSW and Vic governments seemingly going to be hit by a loss of stamp duty revenue over the coming years, it would seem that now is as good a time as ever to look to move away from this transactional tax,” Kusher said. “Although no one likes additional taxes, a tax on all residential properties is more equitable than a tax on the 4%-6% of properties that transact in any given year. Furthermore, it provides a more guaranteed revenue stream to state government so they can better plan their expenditure into the future.”
