The Reserve Bank of Australia Governor has criticised stamp duty as a barrier to retirees downsizing, amid shrinking household sizes and a national housing crisis.
Asked about stamp duty at the Bradfield Oration at the Sydney Opera House on Friday, 24 October, Michelle Bullock referenced predecessor Philip Lowe’s 2020 description of stamp duty as a “tax on mobility.”
“There’s many older people whose families have left home, who are still in their large homes, and they’re not downsizing,” Ms Bullock said. “Are there policies, taxes, things we do that are discouraging people, perhaps, from downsizing? Are there reasons why people aren’t sharing?”
Stamp duty – levied by State Governments on property transactions – accounts for around a quarter of state taxation revenue. In NSW, duty on a $1.5 million home is about $65,000.
Australia’s average household size is around 2.5 people, down from 2.8 in the mid-1980s. The RBA has noted that if average household size returned to 2.8, Australia would need 1.2 million fewer dwellings for the current population.
Retirement Living Council (RLC) Executive Director Daniel Gannon said the current system punishes older Australians who want to “rightsize” and free up family homes.
“The RBA Governor is bang-on the mark. Several prehistoric policies are keeping older Australians trapped in their homes – and stamp duty is just one part of the story,” he said. “When the RBA Governor suggests that older Australians move, but so many can’t, that points to policy failure.”
The RLC is calling for two reforms to remove rightsizing roadblocks: raising the Age Pension Asset Cap from $315,000 to $550,000 and raising Commonwealth Rent Assistance (CRA) from $252,000.
