Stepped on by stamp duty: The effect of housing transfer taxes on home purchases and people movement

Authors: Nicholas Garvin, Gianni La Cava, Angus Moore and Aaron Wong

Stamp duty has become a conspicuous feature of the Australian economy, now costing buyers around five times that of a generation ago. Past work argues that it dulls economic vibrancy by reducing how often people buy homes and move. But whether it has this effect has not been tested or measured.

We find that:

  • A one percentage point increase in stamp duty reduces the volume of home purchases by 7.2%.
  • Purchases in urban and rural areas, and of apartments and houses, are equally affected.
  • Separate data show a similar effect size of stamp duty on the rate at which people move homes.
  • Moves of all distances – e.g. across suburbs and across states – decline in response to a stamp duty rise.

The Overview section of the note provides a plain-language description of the results and their implications.