New research by the e61 Institute and PropTrack has revealed there’s been a significant increase in relative stamp duty costs in recent decades.

Back in the early 1980s, buyers in Sydney, Melbourne, Brisbane and Adelaide needed to do about one month’s work to cover the cost of stamp duty, assuming they purchased a median-priced property and earned the average post-tax income. But as of 2023, it takes about six months’ work in Sydney and Melbourne, five in Adelaide and four in Brisbane.

Last year, almost all buyers faced a stamp duty rate equivalent to at least 3% of the sale price, while, in the early 1990s, almost all buyers paid less than this amount.

PropTrack senior economist Angus Moore said the two reasons stamp duty had become relatively more expensive were because property prices had grown faster than incomes and state governments had allowed ‘bracket creep’ to occur with stamp duty tax brackets.

“Bracket creep happens, firstly, because the price brackets have been updated only infrequently and, secondly, because home prices have grown, often substantially, since the brackets were last set,” he said.

“That means more properties have moved up the brackets and are now paying higher rates of stamp duty.”

First home buyers are able to enter the market a little faster than a year ago, new research has found.

At a national level in February, it took 4 years 9 months for a first home buyer to save a 20% deposit on an entry-level house, compared to 4 years 11 months the year before. For an entry-level unit, the time to save a deposit was 3 years 5 months – one month faster than the year before.

Domain classified an entry-level property as one ranked at the 25th price percentile (with the 1st percentile being the cheapest home and the 100th being the dearest). Domain’s calculations assumed that first home buyers were a couple aged between 25-34, earning an average salary for someone their age.

The reason that first home buyers are now able to save a deposit more quickly is not because property prices have fallen over the past year – because they’ve actually increased. Rather, it’s because earnings power (through a combination of higher wages and higher savings account interest rates) has grown faster than property prices.

Australians purchased 5.3% more new homes in February than the month before, according to the Housing Industry Association (HIA).

However, HIA chief economist Tim Reardon said this increase was off a “very low” base. Based on the number of new homes being approved for construction and purchased, he forecast there would be a decade-low amount of homebuilding activity in 2024, despite the pent-up demand for housing.

Nevertheless, banks are still keen to lend to Australians who want to build a new home or renovate an existing one. To finance your project, you’ll need a construction loan (rather than a regular home loan). Here’s how construction loans work:

• To apply for a loan, you need to provide the lender with your building contract, building plans and council approvals
• You receive the money in stages (usually five) throughout the project, rather than one lump sum at the start
• You pay interest only on the portion of the loan you’ve received, not the entire amount
• Construction loans typically have terms of 12-24 months; they may then revert to a standard home loan