PROPERTY pundits have renewed calls for stamp duty to be scrapped, slamming the tax for aggravating a string of already serious risks to the housing market and economy.

Speaking at a meeting of the Housing Industry Association, RMIT University professor Gavin Wood said stamp duty has prevented young people from owning a home by hiking their upfront expenses.

The tax has further damaged the labour market by encouraging existing homeowners to stay where they are rather than move to other areas with better jobs so that they can avoid paying the tax.

“Stamp duty discourages mobility and that’s a major problem for the economy,” Mr Wood said.

“It also prevents people from using certain housing stock. Empty nesters who would move to smaller homes are instead staying put to avoid the tax. The result is that these larger homes are not available to young families with children.”

media_camera Stamp duty is partly responsible for the low supply of houses available in cities like Sydney, Mr Wood said, resulting in increasing numbers of people competing for the same properties.

Mr Wood said another danger is that the tax payment, which averages roughly $25,000 per property transaction in NSW, has eroded the typical deposit on a home and encouraged new homebuyers to take out larger mortgages.

Coupled with rising house prices, this has meant the average Australian owns a smaller proportion of their home than they did 25 years ago, making them more vulnerable to price falls, according to Mr Wood.

media_camera The Casha family outside their Kellyville home, which attracted more than $80,000 in stamp duty charges.

“If prices fall, those who own only a small portion of their homes are most at risk of having to pay off mortgages worth more than the value of their properties,” Mr Wood said.

He recommended the tax be replaced by a uniform land tax that all homeowners would pay annually. The land tax would not apply to those who had already paid stamp duty.

Under this system, the tax burden would be shared by owners of both new and older housing, as opposed to the current regimen which puts a higher tax burden on buyers of newly built houses, Mr Wood said.