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As the economic reform roundtable wraps up, pushes for a stamp duty reform are ramping up with Dr Nicola Powell, Domain’s chief of research, advocating for a “fairer, more efficient land tax”.
A new Domain analysis has called for a national stamp duty reform as the government, unions, and experts examine how the country can map a plan for stronger productivity.
Powell said the economic roundtable should overhaul stamp duty and replace it with a land tax.
“One reform stands out as urgent, obvious and overdue: replacing stamp duty with a broad-based land tax,” Powell said.
“A national shift to land tax would remove a major barrier to buying and selling, improve the efficient use of housing, and boost labour market flexibility – all while delivering more stable and predictable revenues for governments.”
Stamp duty was first introduced in 1865 by the NSW colony, before being followed by Victoria, Queensland, and the rest of the country.
Since then, stamp duty has remained entrenched and, over the decades, has become a major barrier for aspiring home owners, with costs rising far faster than household incomes.
Domain’s data showed that in some eastern states, stamp duty costs have grown up to 3.4 times faster than incomes since 2000.
In Sydney, stamp duty on a median-priced house has more than doubled in the last 20 years, going from 45 per cent of the gross household disposable income in 2000 to 120 per cent in 2024.
“What was once a relatively manageable upfront expense is now a significant barrier, forcing buyers to save for longer and pay more – on top of already steep deposits,” Powell said.
Additionally, Powell said stamp duty has now become a home ownership and mobility issue, with Australians now holding onto houses for an average of nine years, three years longer than 15 years ago.
Over the years, numerous studies have shown that stamp duty yields unpredictable revenue and stifles the local economy, deterring people from relocating to homes that better suit their changing needs.
“Its downsides are far-reaching, starting with the impact on individual buyers and rippling through to the broader economy and state finances,” Powell said.
“It’s hard to find an economist who will defend stamp duty.”
Powell said that stamp duty has been one of the “most damaging” taxes in the country, acting as a “drag” on productivity and a more balanced property market.
Research by Domain showed that for every dollar raised by stamp duty, around 70¢ of potential economic activity is lost, while a land tax costs the economy less than 10¢ for the same amount raised.
Additionally, she said that a 100-basis-point decrease in the rate of stamp duty would increase property transactions by about 10 per cent.
In NSW, data showed that stamp duty removal would raise property transaction volume by 40–70 per cent.
“The result is a tax that once helped fund local services now acts as a powerful brake on home ownership,” Powell said.
She said having a unified broad land tax would be the ideal replacement for stamp duty, with the federal government playing a key role in its inception.
Powell suggested following a similar model to the ACT which, back in 2012, launched a 20-year reform program to gradually end stamp duty, replacing it with higher annual rates.
“This staged approach avoided fiscal shocks, gave households time to adjust, and ensured all properties contributed to revenue.”
While the approach worked for the ACT, other states face complex institutional barriers that Powell said federal intervention would be needed to facilitate the transition.
She said that while state governments would lose out on large, immediate revenue streams, federal support through transitional funding and a national reform framework would make the shift viable.
“The broader gains, from higher labour mobility to more efficient housing use, flow through to the national economy, making federal involvement not just desirable but justified,” Powell said.
“If governments are serious about improving housing affordability, labour market dynamism and productivity, replacing it with a broad-based land tax is one of the clearest wins available.”
“The economics are settled. The barrier is politics,” Powell concluded.
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