Australia’s most expensive property market had the biggest surge in house prices because of a change to a $1.5million threshold.
Sydney house prices climbed by two per cent last month as buyers flocked in before they lost the chance to avoid having to pay tens of thousands of dollars in stamp duty.
Until July 1, home buyers in NSW had the choice of either paying an annual land tax or upfront stamp duty for a home worth up to $1.5million.
That meant this buyer could either pay $2,735 a year on land tax or $65,555 upfront in stamp duty – a big issue in an expensive housing market.
Former New South Wales Liberal premier Dominic Perrottet’s policy gave buyers the option of paying 0.3 per cent land tax on every dollar above a $755,000 threshold plus $500.
But his Labor successor Chris Minns and incoming treasurer Daniel Mookhey scrapped that policy after winning the March election.
Sydney house prices climbed by two per cent last month as buyers flocked into the market before they lost the chance to avoid having to pay stamp duty. Until July 1, home buyers in NSW had the choice of either paying an annual land tax or upfront stamp duty for a home worth up to $1.5million (pictured is a Northern Beaches house on the market)
Labor instead lifted the stamp duty exemption for first home buyers to $800,000, up from $650,000 as of July 1, and increased the concessional stamp duty level to $1million, up from $800,000.
In a sign buyers wanted to take advantage of the land tax choice before it ended, Sydney was last month Australia’s best performing market with median house prices rising by two per cent to $1,324,396, CoreLogic data showed.
Sydney’s auction clearance hit a monthly high of 75.9 per cent in the week ending on June 11 but have been declining ever since, sinking to 71.2 per cent on the first weekend of July when the land tax option was no longer available.
The proportion of homes passed in at auction rose to 13.2 per cent this week, up from 9.7 per cent a week earlier.
South-west Sydney had an even weaker auction clearance rate of 38.1 per cent.
House prices last month rose in every state capital city, except Hobart, even though the Reserve Bank raised interest rates in June for the 12th time since May 2022.
CoreLogic’s research director Tim Lawless said the prospect of one of two more rate rises, starting again on Tuesday, could stall the recovery in house prices, after they peaked in 2022 in most cities.
‘Forecasts on where the cash rate will land and how long it will stay elevated vary, but it’s likely there is at least one more rate hike to come, potentially more,’ he said.
NSW Labor Premier Chris Minns (pictured on election day in March with his wife Anna) scrapped his Liberal predecessor’s policy of allowing home buyers the option of paying an annual land tax instead of upfront stamp duty
Sydney has biggest house price increase
SYDNEY: Up 2 per cent to $1,324,396
MELBOURNE: Up 0.6 per cent to $918,971
BRISBANE: Up 1.3 per cent to $806,781
ADELAIDE: Up 1 per cent to $712,421
PERTH: Up 0.9 per cent to $615,793
HOBART: Down 0.5 per cent to $690,085
DARWIN: Up 0.1 per cent to $585,782
CANBERRA: Up 0.5 per cent to $954,079
Source: CoreLogic data on median house prices in June 2023
‘It’s hard to imagine the recent pace of growth in housing values being sustained while sentiment is close to recessionary lows and the full complement of borrowers are yet to experience the rate hiking cycle in full.’
Brisbane was the second best performing market after Sydney with the mid-point house price rising by 1.3 per cent to $806,781.
Adelaide’s median house price climbed by one per cent to $712,421, with CoreLogic expecting it to hit a record high in July.
Perth house values rose by 0.9 per cent to a record high of $615,793.
Melbourne house prices increased by 0.6 per cent to $918,971, even though it’s a city that is receiving a large influx of new migrants.
Canberra values edged up by 0.5 per cent to $954,079.
Darwin, Australia’s most affordable capital city market, had the smallest monthly increase of 0.1, taking the median price to $585,782.
But Hobart house prices fell 0.5 per cent to $690,085.
Economists are widely expecting the Reserve Bank of Australia to raise interest rate on Tuesday to a 12-year high of 4.35 per cent, up from an existing 11-year high of 4.1 per cent.
Inflation in May moderated to 5.6 per cent, down from 6.8 per cent in April, but it was still well above the RBA’s 2 to 3 per cent target.