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The Impact of Stamp Duty Reductions on Demand in the Perth Housing Market

Author/s: Greg Costello

Date Published: 1/01/2006

Published in: Volume 12 - 2006 Issue 2 (pages 198 - 212)

Abstract

In 2004, the Western Australian state government announced and implemented policy incentives for first-home buyers in the form of either total conveyance duty (stamp duty) exemptions or significant reductions for specified price bands of housing. This paper analyses the impact of this policy on demand in the Perth housing market. Results confirm an immediate and significant impact on demand in both price segments that were the target of policy and to a lesser extent also within price segments that were not the target of policy. Results also confirm some important information diffusion or ‘news’ effects. The release of information two months prior to enactment of the policy lead to a pronounced decline in demand for cheaper housing and also in other price segments prior to enactment of the policy.

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Keywords

Demand - Housing - Policy Influences - Stamp Duty

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