Western Australia’s transfer duty settings were built for a Perth property market that no longer exists.
The top marginal rate of 5.15 per cent, applied to any portion of a transaction above $725,000, was calibrated for a market in which that threshold captured only premium purchases.
But at the end of June, Cotality’s Home Value Index recorded Perth’s median dwelling value at $1,046,551, sitting more than $300,000 above the point at which the top rate of duty applies.
That means an ordinary buyer purchasing a typically priced Perth home now pays that top rate on a substantial slice of the purchase – not because any government decided households buying median-priced homes should shoulder a heavier burden but because the threshold has fallen behind the market it was designed to apply to.
The consequence extends beyond the upfront cost of buying and affects those who choose to sell in the first place.
REIWA data for the week ending July 19 recorded 4504 houses and 1433 units listed for sale across Perth – a combined total of 5937.
REIWA has previously cited a range of 10,000-12,000 listings as representing a genuinely balanced market, one where supply meets demand comfortably.
Perth remains well below that range and stamp duty settings play a real part in keeping it there.
Transfer duty operates as a cost attached to the decision to move, not just to buy.
For an owner whose family home has become larger than they need, the duty payable on a more suitable replacement adds a material upfront cost on top of agent fees, legal costs and the disruption of relocating.
Across a city with a growing cohort of older owner-occupiers, the cumulative effect on established stock turnover is significant, and it constrains the supply of family homes available to the next generation of buyers.
The State Government has moved on part of this problem, with the expansion of the off-the-plan duty concession recognising transfer duty settings shape decisions about where and how people choose to live, and that new housing supply benefits from more favourable duty treatment than established stock.
The broader threshold problem in existing homes, however, remains unaddressed.
Indexing the threshold to reflect current values would be a modest change with an outsized effect, freeing up the established homes that older owners are ready to leave and younger families are waiting to buy.
