Cao, Karyn --- "Proposed Stamp Duty Reform In New South Wales: What Are The Social And Economic Outcomes? Will It Achieve Its Aim Of Making Housing More Affordable?" [2022] UNSWLawJlStuS 4; (2022) UNSWLJ Student Series No 22-4

---

PROPOSED STAMP DUTY REFORM IN NEW SOUTH WALES: WHAT ARE THE SOCIAL AND ECONOMIC OUTCOMES? WILL IT ACHIEVE ITS AIM OF MAKING HOUSING MORE AFFORDABLE?

KARYN CAO

I INTRODUCTION: HOUSING AFFORDABILITY CONCERNS AND STAMP DUTY REFORM

The “Great Australian Dream” of home ownership is still a widely held aspiration, which affords homeowners with security of housing tenure and facilitates longer term social and economic benefits for individuals and the broader community.^[1] However, housing affordability has significantly declined in Australia over the past three decades, raising numerous social and economic challenges.^[2] Despite the many other factors that may influence housing affordability, proponents of stamp duty reform claim that the current system of property taxation contributes to this decline in affordability, resulting in adverse effects on housing for many low and middle-income Australians.^[3]

While the reforms are expected to cover residential land, primary production and commercial land, this essay will focus on the potential outcomes of the reforms on the NSW residential property market. This essay will argue that there may be economic benefits associated with stamp duty reform if we assume all individuals are rational actors and make economically logical decisions which provide them with the greatest financial benefit. However, in reality, individuals are motivated by emotional and personal factors beyond pure economic self-interest and therefore, rational choice models may make unrealistic assumptions about individual behaviour.^[4] As a result, it appears that social influences pertaining to property purchase decision-making have not been holistically considered by policy-makers and this may undermine any affordability improvements to the NSW housing market. The purpose of this essay is not to debate the economic efficiency of stamp duty, but rather to consider the main legal and policy assumptions behind the analysis, and whether this holds true when assessed in practice. Additionally, this essay raises the issues of the opt-in system of gradual transition to property taxes and its ability to create a two-tier system of housing and contribute to friction disincentivising people from moving homes. The combination of these issues suggests the economic and social benefits of stamp duty reform are not as clear as initially presented by the NSW government.

II BACKGROUND TO STAMP DUTY REFORMS

At present, NSW legislation imposes transfer duty on transactions over dutiable property, mainly covering transfers of freehold title and other types of transactions which are subject to transfer duty,^[5] paid on a progressive scale comparable to consideration paid for the purchase. In 2020, the NSW Government released a Consultation Paper setting out proposals for stamp duty to be replaced by a new property tax.^[6] This proposed reform provides property purchasers with a choice to pay stamp duty or a smaller annual property tax, consisting of a fixed amount plus a rate applied to the unimproved land value of the individual property.^[7] At the most recent release of the 2021-22 NSW State Budget in June 2021, then NSW Treasurer Dominic Perrottet confirmed in his budget speech that

‘we’re progressing our property tax proposal, because we know housing affordability is the challenge of a generation, and we want young people to get a foot in the door’.^[8] Clearly, this is a topical and present issue, especially when we observe property prices in Sydney increasing by more than 25% in the year to October 2021,^[9] representing the highest annual growth rate since June 1989.^[10] Home ownership rates have been in long-term decline across all age groups under 65 since 1995, and have been particularly salient for the under-35s,^[11] while 70% of all housing wealth is concentrated in the hands of the over 65s,^[12] resulting in implications for generational inequality.

Therefore, the key rationales for this reform are related to boosting home ownership (particularly first home ownership) and enhancing home mobility, thereby stimulating the economy through increasing job mobility and improving employment options. Underpinning this is the concern that large transaction costs may reduce housing turnover and result in households remaining in properties which no longer suit their needs. ^[13] This in turn imposes an intangible cost to the wider economy as the threshold of owner-occupiers level of inconvenience or discomfort before considering moving homes increases.^[14] Therefore, stamp duties have been termed as a ‘tax on mobility’,^[15] with possible side effects being increased commute times, decreased labour market mobility and importantly, reduced housing affordability.^[16] Overall, stamp duties are widely considered to be one of the least efficient taxes in Australia, resulting in low levels of investment in property and inefficient allocation of property stock.^[17]

Due to this economic rationale, reform proposals put forward by the NSW Government are not novel, with the idea of universal land taxes having the favour of economists from the nineteenth century.^[18] Land tax was previously introduced at the state and federal levels both as a tax on wealth and to incentivise the break-up of under-utilised land. Federal land tax was abolished – however, at the state level, land tax continues to apply. The Land Tax Amendment Act 1970 (NSW) introduced exemptions that apply to relevant land used for primary production and widened exemptions for most owner-occupied single dwelling houses. Interestingly, the underlying rationale for such exemptions involved the idea that with rising property values, landowners would become liable for taxes in cases where it was never anticipated and the incidence of tax would become excessively burdensome in some cases.^[19] Hence, should the NSW government succeed in the introduction of property taxes, it appears to overturn this historical rationale, and worryingly, without the existence of adequate solutions which address the question of the ongoing capacity of homeowners to pay and the profound loss of state tax revenue. The June 2021 Progress Paper expressed the view that the Commonwealth would stand to gain substantial benefit through the result of productivity benefit flowing through the general economy from the removal of stamp duty.^[20] However, without any alternative arrangements, NSW would lose up to $1bn of GST revenue per year in the long run,^[21] raising questions about the broader economic viability of such reforms.

III ECONOMIC ASSUMPTIONS

The consensus view amongst policymakers remains that removing stamp duty and replacing it with an annual property tax will have broad economic benefits, including resolving some of the ongoing affordability issues in NSW, particularly in metropolitan Sydney. This near universal enthusiasm for stamp duty reform stems from many economic think tanks, such as the Grattan Institute, the Australia Institute and the Centre for Independent Studies, and many housing sector interest groups such as Real Estate Institute and the Property Council, as well as the NSW Treasury, the government commissioned Henry Tax Review and many academics. Much of the criticism of the existing regime relates to stamp duty being seen as problematic in terms of economic efficiency. Taxing transactions is a disincentive for owners wanting to move to more appropriate residences, including effects on two key groups of property transactors – those moving for new employment opportunities (labour mobility), and retirees who may be looking to ‘downsize’.^[22] From a labour perspective, stamp duty as an impediment to housing mobility may result in individuals forgoing better job offers in other regions (and therefore reducing labour productivity), or otherwise to commute overly long distances to their new job (and thereby increasing road congestion).^[23] The misallocation of housing stock also arises from discouraging retiree households from downsizing, and thereby disallowing young families to upsize their housing when required.^[24] This is based on the simple assumption that households are frequently confronted with changes in their demand for housing, and when transaction costs are present, households would not react in the same way as when those costs are absent, preventing them from moving to the residence which best fits their preference.^[25] It is argued that such transaction costs will generally lead to reductions in the welfare of citizens due to the prevention of optimal allocation of residences in line with the true preference of households.^[26]

Additionally, other studies have suggested that the imposition of general transaction costs, such as that imposed by stamp duty, have a significant negative impact on labour mobility, including estimates that a 1% increase in the value of transaction costs results in a decline in residential mobility by 8%.^[27] This is similar to examples seen in overseas jurisdictions which have applied a real estate transfer tax. In the application of a transfer tax in the UK for select transaction values, it was found that an increase in the tax equivalent to approximately 2% of property prices reduced the changes of moving house by 40%.^[28] When Toronto unexpectedly introduced a real estate transfer tax, it was shown that the 1.1% tax reduced sales of homes by 15%.^[29] It is thought that due to these links between stamp duty and mobility, the removal of stamp duty in favour of a property tax would encourage greater mobility, resulting in efficient use of housing stock and an overall increase in labour mobility.

This is all based on the assumption that housing will be more effectively ‘reallocated’, such that as more people can move homes more easily, and they will be less likely to live in homes with underutilised spare rooms. This means that baby boomers who have large houses will be able to downsize, resulting in an estimated 3-4% reduction in home prices.^[30] However, it can be noted that a similar reform in ACT which removed stamp duty did not increase the efficient use of land, as when it was removed for those over 65, it was reported that the exemption was utilised by people to buy larger homes rather than downsize.^[31] This means that overall prices have likely gone up with the reform, even more than the equivalent of the reduction in stamp duty, as buyers used the saved tax to raise their maximum deposit. Therefore, it is more likely that individuals will remain in their existing properties, rather than move into a property in which annual taxes will be applied during a period of time (retirement), when their income is drastically reduced. It has been proposed that if consumers were buying their ‘forever homes’, then they should, as economically rational decision makers, decide on paying stamp duty, however those who wish to move frequently may opt for annual property tax.^[32] Ultimately, the ACT example highlights the economic assumption behind consumers making the choice between stamp duty and annual property tax proposed is too simplistic.

Additionally, the economic evidence that the removal of stamp duty by itself will support housing affordability is dubious. While the legal obligation is on the purchaser to pay, the economic incidence falls on the vendor as when it comes to purchasing decisions, stamp duty is already factored into the price the purchaser is prepared to pay.^[33] As such, some research evidence suggests higher rates of stamp duty may result in lower prices generally.^[34] This disproves the widespread view that stamp duty is seen as an addition to the cost of purchase and enhances affordability problems, as overall stamp duty tends to suppress prices. Hence, stamp duty appears to have no direct impact on home ownership and affordability as the reduction in tax on house purchases will simply be capitalised into property prices.^[35]

IV SOCIAL CONSIDERATIONS

Even assuming all the above economic analysis is sound, residential mobility is inherently influenced by factors beyond transaction costs. Much of the existing econometric analysis is largely based on households selling property if their preferences become mismatched to their current home, suggesting the removal of stamp duty would abate this “lock-in effect”. While HILDA provides survey data to assess why Australian households have moved in the last year, it was conceded that these reasons are not clear as to whether the transition is eventually made due to a mismatch in size or quality of the residence, or due to lifecycle factors external to physical property.^[36] Households will move for different motives, and without much postponement despite the existence of transaction costs. ^[37] The analysis below will explain why transaction costs are not a key disincentive for residential mobility and why other social and emotional factors will more greatly influence residents’ decision-making.

Firstly, it is recognised there are compelling practical arguments on the negative social effects of residential immobility.^[38] For instance, for a household with an increase in income, most would be inclined to purchase a larger residence. However, due to the presence of transaction costs, they may decide to postpone their move until after another increase in income so as to economise on moving costs and are therefore left with a residence that does not align with their preferences. In another scenario, upon the offer of a new job which is distanced from the residence, the household may decide to decline the offer (and from a macroeconomic perspective, this affects overall labour productivity) or they may accept a longer commuting distance which may cause further congestion on roads. In this case, stamp duty may not necessarily create misallocation in the type of residence occupied but will reduce welfare for the broader population through non-optimal behaviour in the labour and transportation market. Hence, it is hypothesised that in the extreme case where transaction costs are at zero, households would be expected to move very frequently as their demand for housing changes continuously given new job relocations and household composition changes.^[39]

However, Peter H. Rossi, a leading sociologist, concluded that residential mobility is the process by which ‘families adjust their housing to the housing needs that are generated by shifts in family composition that accompany life cycle changes’.^[40] Through these observations, Rossi’s model identified that social transitions, such as leaving the parental home for education or work purposes, marriage, divorce, and child rearing are all leading life-cycle reasons for residential mobility. This gave rise to the conceptualisation of residential moves as a discrete one-way transition from one dwelling to another. Much of the literature surrounding stamp duty effects on residential mobility centres around two populations age groups at different points in their life cycle – seniors who are encouraged to undertake ‘down-sizing’, and those who are required to move for work purposes. ^[41] Thus, the analysis below will delve deeper into the key aspects of decision making that these two groups may face. Instead of taking a neo-liberal conceptualisation in assessing only the economic utility of moving, the factors that are considered will be interpreted in the broader concept of behavioural and life-cycle factors.

A ‘Down-sizing’ Seniors

Conventional wisdom in the current policy landscape assumes older people are a more residentially mobile group, particularly due to the phenomenon of “down-sizing”. Underpinning the government’s downsizing rationale are two broad assumptions – that where the number of bedrooms exceed the number of residents in the household, these rooms are not fully utilised and that there are appropriate and available dwellings in which older people can (and wish) to move.^[42] However, while 55% of older respondents to a 2020 Australian Housing and Urban Research Institute (‘AHURI’) survey indicated that they have downsized or are prepared to do so,^[43] this was not primarily for financial considerations. Financial motivations were of importance to only a few downsizers, with financial gain a more common motivation than financial difficulty.^[44] The preference to downsize was primarily due to the benefits of reduced time and cost of maintaining their property particularly in relation to large gardens, and for other lifestyle and health related reasons.^[45] As such, social and physical factors will typically dwarf financial considerations, as survey data has identified that only around 10% of downsizers are motivated by financial gain.^[46] This includes stamp duty being only a barrier for around 5% of those considering downsizing.^[47]

1 Emotional cost of moving

Countering the benefits of mobility, homeowners are confronted with substantial, non-monetary transaction costs. This includes the potential negative effects of a residential move on neighbours and friends, who have their number of social contacts reduced. Study results have revealed that seniors are emotionally attached to their home and neighbourhood and the overriding dynamic is one of stability across metropolitan area, with the dominant trend being ‘ageing in place’.^[48] There is evidence to suggest that older adults prefer to live in their own home for as long as possible, remaining independent and active in their own home.^[49] In such cases, immobility may be a result of lack of suitable alternative dwellings, as well as the social inability to cope with disruptions and the economic costs with moving houses. Hence, studies show that while pre-retirement age (55-65) is correlated with a peak in mobility, most stability was seen between the ages of 65 and 85, particularly as housing modifications and support services continue to help the elderly to age in a place they remain settled.^[50] In fact, the majority of moves by the oldest aged seniors were short distance, ^[51] and this may indicate that they are merely moving within their local community, with this attachment as the reason to remain in family home. This points to the importance of place attachment, and a stronger attachment that older people have to their neighbourhoods due to their existing social ties and memories that a long residence in a particular area might bring, which makes the process of moving an often time consuming and emotional experience.^[52] Hence, even if older Australians would consider downsizing, many demonstrate a strong desire to remain in their current neighbourhood, due to the attachment people have to their community, beyond just their physical home.

The bond between individuals and their residences are connected on a whole set of dimensions to their local places, including the existence of social networks extending beyond the household unit. Links are formed with the surrounding area, with the availability of jobs, schools, hospitals or shopping facilities as instrumental to the development of these neighbourhood relationships. This aligns with the psychology behind residential mobility and well-being as the longer people live in one place, the more local friendships they form and the stronger psychological attachment to community they have.^[53]

Ultimately, residential stability is said to foster an identity as a community and a sense of belonging to the community. If residential mobility is seen as a relational practice rather than a discrete event, it will have the effect of linking lives at the micro scale with each residential movement having the effect of reconfiguring family life and social networks.^[54] At a theoretical level, this immobility can be described as an active process rather than an absence of movement. Spatial moorings are established through crucial anchors around which people actively structure their everyday practices within their physical locations, including through daily commuting to school or work, leisure travel and social interactions with neighbouring individuals. In this analysis of senior Australians’ residential immobility and utilising AHURI survey statistics, it appears that transaction costs are not the main hindrance to mobility, but it is in fact the active choice of not moving bound up with linked lives and structural connection to the broader community which are the main influencing factors.

2 Lack of housing supply

There are also concerns raised around the lack of supply of housing options for downsizers. The assumption that spare bedrooms represent unwanted and underutilised space did not hold true for older Australians as over 75% of seniors surveyed by AHURI in 2020 lived in a separate house with three or more bedrooms.^[55] In fact, 61% one favoured living in a separate house or semi-detached residence with three or more bedrooms.^[56] Even when downsizing, most preferred having three bedrooms, with many considering spare bedrooms as a necessity, including desire to use them as permanent guest rooms (56%), studies (50%) or as spare rooms for children or grandchildren (31%).^[57] While older suburbs tend to have more three-bedroom dwellings and therefore meet the size preferences of many downsizers, they may exhibit maintenance issues and are on larger lots with gardens to maintain. This is a particularly pertinent issue as the two most common reasons why people moved to a smaller residence were physical or cost difficulties in maintaining the home or yard.^[58] Additionally, in established suburbs where many seniors live, there are fewer smaller dwellings as planning laws restrict subdivision. Also, the prevalence for high-density apartment developments over medium density housing products due to greater developer profitability results in an overall lack of ideal residences for many older Australians who would prefer medium density or detached housing.^[59]

There are further considerations surrounding the legal issues of strata and community title even if seniors would consider apartment living as an option. Many seniors have found that the complex documentation for purchases involving strata and community title is unfamiliar and daunting, with the concept of common property and complex strata management deemed as confusing.^[60] Additionally, there may be loss of financial security, not merely due to the payment of ongoing levies, but additional maintenance costs as owners who buy apartments are part of a body corporate and must raise their share of funds towards any committee upgrades. The effect of paying strata levies, additional maintenance, or upgrade costs and potentially property taxes well into retirement may be particularly unattractive for down-sizing seniors. Furthermore, “off the plan” purchases are especially troubling as the final design may change considerably.^[61] There are even further concerns when considering security of tenure, which may be undermined with strata title laws compelling collective selling or redevelopment of an entire strata scheme when only 75% of the owners agree.^[62] Hence, while one of the key policy rationales for downsizing is to reduce the underutilisation of dwellings, this is not aligned to the attitude that many older Australians have towards downsizing, particularly where there are limited favourable housing options available.

3 Effect on Age Pension payments

Potentially one of the largest disincentives is the effect on the age pension, as the family home is considered non-assessable. When downsizing, any remaining cash will be considered assessable and tighter asset tests will mean that seniors may lose a portion of their age pension. ^[63] Therefore, while downsizing may increase overall retirement income, there are detrimental impacts on the age pension which may deter seniors from actively downsizing. As such, concern regarding the proceeds of the sale of the home being subject to the age pension assets test was a major discouraging factor for 20% of all seniors, and 30% of age pensioners.^[64] Additionally, recurrent taxes on residential property are a tax on wealth, and pose a specific challenge on low-income but asset-rich households who may not have the cash flow to pay recurrent taxes. The potential reduction in age pension payments combined with a lack of possible alternative dwellings and inability to cope with both the emotional and economic costs related to moving appear to be the main drivers of residential stability, over and above the effects of stamp duty.

B Labour Mobility

There are additional assumptions about the effects of limited residential mobility producing low levels of labour mobility and therefore impacting overall economic efficiency and growth. However, there is little evidence that for Australians, any potential immobility due to transaction costs will result in labour inefficiencies. For instance, the RBA suggested that moving for work is not a common reason for buying a home, regardless of age, which might reflect a view held by households that work is a temporary reason and therefore not sufficient to commit to home ownership.^[65]While stamp duty may deter Australians from changing addresses and switching jobs, the evidence suggests that most who do need to relocate for work do not buy and sell homes for this purpose in any case.

Additionally, Australians are already some of the most mobile people in the world,^[66] with approximately 15% of the population changing their address domestically each year, and 39% changing their address in the last five years according to the last ABS Census.^[67] This is compared to the average across the globe at 7.9% moving annually and 21% moving every five years.^[68] However, since the 1990s, the intensity or level of internal migration has declined across both local and long distance moves, but in line with trends observed in many developed countries.^[69] It is hypothesised that the increase in local moves may be a product of declining levels of home ownership, with renters generally being more mobile than owner occupiers. Beyond stamp duty, there are multiple reasons why individuals may see a reduction in their movement trends, including the impact of population ageing as older people are less likely to move than younger people, the increase in dual income households making it more difficult for couples to relocate, and worsening housing affordability keeping young people in the parental home for longer.^[70]

This decline in high rates of local migration may also hinge on the increased value of leisure time, reducing job-related migration. ^[71] The increased ability to remain rooted and yet travel long distances for leisure and work (including in couples who live and work apart) and the ability to commute long distance by low-cost airlines or trains, has meant that job-related residential movements are no longer required. This would be an illustration of the fifth stage in Zelinsky’s Model of Migration Transition whereby as national economies develop, they move through a series of migration transitions and declines.^[72] For instance, in advanced societies, urban-to-rural moves become more common as more moves become motivated by a search for amenities or improved quality of life. ^[73] In the future (and perhaps now accelerated by the onset of the COVID-19 pandemic), residential mobility will continue to decline if long-distance commuting substitutes for some moves, working from home substitutes for other moves and further internal organisation changes alter work-residence relations and the need to change residence.

Residential mobility is often advocated to create flexible labour markets and social mobility, yet the above analysis shows that residential mobility is unlikely to be a precursor to labour mobility in modern, developed societies. At the same time, population churn is thought to disrupt communities, as frequent mobility is thought to be detrimental for family ties and children’s education outcomes.^[74] Hence, the general idea of residential mobility is largely linked to a conceptual idea of who should be mobile, in what places and an assumption about their stage of life. These artificial constructs tend to privilege moving to acquire or enhance housing, by entering homeownership, ‘trading-up’ or ‘downsizing’ without adequately considering the lack of practical need for intense residential mobility and the resulting negative social consequences.

V A ‘TWO-TIER’ SYSTEM AND OTHER ECONOMIC OUTCOMES

Before concluding this essay, it would be apt to consider other economic issues arising from the structure of the property tax system, which along with social factors, have not be considered fully by the current government. Submissions to the NSW government also warned that a long transition period would entrench a less efficient ‘two-tier’ property tax system for decades to come, particularly as it is projected that the annual property tax would only replace stamp duty by 2050, with only up to 50% of all properties to have transitioned even after 20 years.^[75] As recognised by the Henry Tax Review (Recommendation 54), a transitional arrangement will be required to build community acceptance and minimise potential disruption.^[76] It means that taxpayers who may prefer to pay stamp duty will not purchase any properties that have already been opted-in and this divides the property market into two types of property with two different groups of buyers, creating artificial distortions to the market. This may result in negative effects on future generations, as the transitional period will be protracted, and complex given the ‘opt in’ system.

Additionally, the rate of tax will weigh in on whether buyers will prefer to pay stamp duty upfront or pay an annual property tax. There exists the prospect of large changes in the rate, which may make the property tax unaffordable in future years. There are difficulties with a mechanism for capping the rate of tax into perpetuity, as exemplified by the system in California. Proposition 13 reforms in California ‘grandfathered’ property taxes to the date of purchase, as any taxes were limited to the ‘assessed value’ of property to 2% per year so long as it is held by the same owner,^[77] and resulted in large discrepancies in property taxes even on properties that were near identical and on the same street.^[78] This had the effect of reducing turnover of properties, and made it harder for the younger population to enter into the property market.^[79] Proposition 13 has now created generational inequities between those who have owned homes in the past and those who have not, and inheritance of these low tax properties will mean that future generations continue to take advantage of the benefit, worsening the wealth divide.^[80] It has also increased the average tenure of Californian homeowners versus those in other states by 10% from 1970 to 2000.^[81] Different rates of property tax in California mean that mobility is effectively discouraged, as taxes can rise dramatically upon a change in ownership.^[82] If such a two-tier system resulted in Australia due to the opt-in option, it may result in similar issues.

VI CONCLUSION

The essay concludes that while there are some economic benefits associated with stamp duty reform if individuals are all rational economic actors, certain social influences on decision making have not been fully considered by policymakers and this may influence the overall considerations of the benefits or detriments of the reform. In NSW presently, there are other factors which are more influential on housing affordability including negative gearing, capital gains tax, interest rates, and supply issues which should be addressed first. It appears that stamp duty has not necessarily created the barrier to homeownership that the NSW government has claimed that it has, as it has dubious links to restriction of residential mobility with respect to “down-sizing” or labour mobility. It is far more likely that high property prices themselves in NSW are the main barrier to home ownership and the introduction of a property tax may mean that purchasers have more upfront funds available and increase their bid price, worsening the affordability issue. Even where stamp duty does tend to reduce property turnover, this helps to maintain a level of price stability by disincentivising speculation, and overall stamp duties tend to reduce house prices as the economic incidence of the tax falls on the seller. ^[83] The combination of these factors suggests that the government rhetoric surrounding stamp duty as a severe impediment to housing mobility is exaggerated, and the economic benefits of stamp duty reform are not as clear as initially presented by the NSW government.

---

^[1] Australian Institute of Health and Welfare, ‘Home ownership and housing tenure’, Australia’s welfare 2021 (Web Page, 16 September 2021) <https://www.aihw.gov.au/reports/australias-welfare/home-ownership-and-housing-tenure>.

^[2] John Daley, Brendan Coates and Trent Wiltshire, Housing Affordability: re-imagining the Australian Dream (Report, Grattan Institute, March 2018) 14.

^[3] Richard Eccleston et al, Pathways to State Property Tax Reform (Final Report No 291, Australian Housing and Urban Research Institute, 30 November 2017) <https://www.ahuri.edu.au/research/final-reports/291>.

^[4] Aki Lehtinen and Jaakko Kuorikoski, ‘Unrealistic Assumptions in Rational Choice Theory’ (2007) 37(2) Philosophy of the Social Sciences 115.

^[5] Duties Act 1997 (NSW) s 11.

^[6] NSW Treasury, NSW Treasury Property Tax Proposal, (Consultation Paper, November 2020).

^[7] NSW Treasury, NSW Property Tax Proposal Progress Paper for June 2021, (Progress Paper, June 2021) ('NSW Progress Paper for June 2021').

^[8] Dominic Perrottet, ‘Your Family, Your Future' (Speech, NSW 2021-22 Budget, 24 June 2021) <https://www.domperrottet.com.au/news/2021-22-budget-speech-your-family-your-future/>.

^[9] ‘Monthly Movements’, Core Logic Home Property Value Index (Web Page, 31 October 2021) <https://www.corelogic.com.au/research/monthly-indices>.

^[10] Courtney Gould, ‘Fundamental overhaul of Australian housing system required to ensure affordability for future generations’, NCA NewsWire (online, 17 November 2021) < https://www.news.com.au/finance/real-estate/buying/fundamental-overhaul-of-australian-housing-system-required-to-ensure-affordability-for-future-generations/news-story/3cc94ca708660bb3c73ab0184d60b6c6>.

^[11] Duncan Maclennan et al, Housing: Taming the Elephant in the Economy (Report, UNSW City Futures Research Centre, June 2021) ('Housing: Taming the Elephant in the Economy') 9.

^[12] Ibid.

^[13] Yunho Cho, Shuyun May Li and Lawrence Uren, 'Stamping Out Stamp Duty: Property or Consumption Taxes?' (Working Paper No 1/2021, Centre for Applied Macroeconomic Analysis, January 2021) 1.

^[14] Hal Pawson, Vivienne Milligan and Judith Yates, Housing Policy in Australia: A Case for System Report (Palgrave Macmillan, 2020) 51.

^[15] Commonwealth, Parliamentary Debates, House of Representatives Standing Committee on Economics, 14 August 2020, 5 (Philip Lowe) quoted in National Centre for Social and Economic Modelling, Submission No 8 to House Standing Committee on Tax and Revenue, Inquiry into Housing Affordability and Supply, (September 2021).

^[16] Deloitte Access Economics, The Economics Impact of Stamp Duty: Three Reform Options (Report, December 2015) 7.

^[17] Ibid 4.

^[18] Richard M Bird, ‘A National Tax on the Unimproved Value of Land: The Australian Experience, 1910-1952’ (1960) 13(4) National Tax Journal 386, 386-387 (‘A National Tax on the Unimproved Value of Land’).

^[19] Rachel Simpson and Honor Figgis, ‘Land Tax in New South Wales’ (Briefing Paper No 6/98, Parliamentary Library Research Service, Parliament of NSW, April 1998) 4.

^[20] NSW Progress Paper for June 2021 (n 7) 11.

^[21] Ibid 53.

^[22] Daley, Coates and Wiltshire (n 2) 37.

^[23] Michiel van Leuvensteijn and Jos Ommeren, ‘New Evidence of the Effect of Transaction Costs on Residential Mobility’ (2005) 45 Journal of Regional Science 681.

^[24] Ian Davidoff and Andrew Leigh, ‘How Do Stamp Duties Affect the Housing Market?’ (2013) 89(286) Economic Record 396, 409.

^[25] Jos Ommeren, ‘Transaction Costs in Housing Markets’ (Discussion Paper No 08-099/3, Tinbergen Institute, 15 October 2008) 3.

^[26] Ibid 2.

^[27] van Leuvensteijn and Ommeren (n 23).

^[28] Christian AL Hilber and Teemu Lyytikainen, ‘The Effect of the UK Stamp Duty Land Tax on Household Mobility’ (Discussion Paper No 0115, Spatial Economics Research Centre London School of Economics and Political Science, July 2012) 16.

^[29] Ben Dachis, Gilles Duranton and Matthew Turner, ‘The Effects of Land Transfer Taxes on Real Estate Markets: Evidence From a Natural Experiment in Toronto’ (2012) 12(2) Journal of Economic Geography 327, 327.

^[30] NSW Progress Paper for June 2021 (n 7) 25.

^[31] Robert Breunig et al, Analysis and Impacts of the ACT Tax Reform (Final Report, Tax and Transfer Policy Institute ANU Crawford School of Public Policy, 5 May 2020) 37.

^[32] Donald R Haurin and H Leroy Gill, ‘The Impact of Transaction Costs and the Expected Length of Stay on Homeownership’ (2002) 51(3) Journal of Urban Economics 563.

^[33] Pawson, Milligan and Yates (n 14) 339.

^[34] Davidoff and Leigh (n 24) 396.

^[35] Hal Pawson, ‘Far-Reaching Housing Tax Reform Could Be Back on the Agenda’, City Futures Blog (Blog Post, 5 October 2020) <https://blogs.unsw.edu.au/cityfutures/blog/2020/05/far-reaching-housing-tax-reform-could-be-back-on-the-agenda/>.

^[36] Household, Income and Labour Dynamics of Australia (HILDA), The 15^th Annual Statistical Report of the HILDA Survey (Report, Melbourne Institute, 9 December 2020) <https://melbourneinstitute.unimelb.edu.au/hilda/publications/hilda-statistical-reports>.

^[37] Riaz Hassan, Xiaowei Zang and Scott McDonnell-Baum, ‘Why Families Move: A Study of Residential Mobility in Australia’ (1996) 32(1) The Australian and New Zealand Journal of Sociology 72.

^[38] van Leuvensteijn and Ommeren (n 23).

^[39] van Ommeren (n 25) 3.

^[40] Peter H Rossi and Anne B Shlay, ‘Residential Mobility and Public Policy Issues: “Why Families Move” Revisited’ (1982) 38(3) Journal of Social Issues 21.

^[41] Hal L Kendig, ‘Housing Careers, Life Cycle and Residential Mobility: Implications for the Housing Market’ (1984) 21(3) Urban Studies 271, 272-275.

^[42] Amity James, Steven Rowley and Wendy Stone, Effective Downsizing Options for Older Australians (Final Report No 325, Australian Housing and Urban Research Institute, 12 February 2020)

<http://www.ahuri.edu.au/research/final-reports/325> .

^[43] Ibid 2.

^[44] Bruce Judd et al, Downsizing amongst Older Australians (Final Report No 214, Australian Housing and Urban Research Institute, 07 January 2014) 4 < https://www.ahuri.edu.au/research/final-reports/214 >.

^[45] James, Rowley and Stone (n 42) 11.

^[46] Judd et al (n 44) 97.

^[47] Ibid 129.

^[48] Mariana T Atkins, ‘“On the Move, or Staying Put?” An Analysis of Intrametropolitan Residential Mobility and Ageing in Place’ (2018) 24(3) Population, Space and Place 1.

^[49] Australian Government Productivity Commission, Housing Decisions of Older Australians (Research Paper, 1 December 2015) 33 ('Housing Decisions of Older Australians'). <https://www.pc.gov.au/research/completed/housing-decisions-older-australians>.

^[50] Judd et al (n 44) 98.

^[51] Housing Decisions of Older Australians (n 49) 5.

^[52] Ibid 87.

^[53] Shigehiro Oishi, ‘The Psychology of Residential Mobility: Implications for the Self, Social Relationships, and Well-Being’ (2010) 5(1) Perspectives on Psychological Science 5, 15.

^[54] Rory Coulter, Maarten van Ham and Allan M Findlay, ‘Re-Thinking Residential Mobility: Linking Lives through Time and Space’ (2016) 40(3) Progress in Human Geography 358.

^[55] James, Rowley and Stone (n 42) 36.

^[56] Tim Adair, Ruth Williams and Thoa Menyen, Downsizing decisions of senior Australians: What are the motivating and discouraging factors? (Report, National Seniors Productive Ageing Centre, June 2014) 4 <https://minerva-access.unimelb.edu.au/bitstream/handle/11343/116116/DownsizingDecisions%2520Report.pdf?sequence=1>.

^[57] James, Rowley and Stone (n 42) 63.

^[58] Judd et al (n 44) 24.

^[59] James, Rowley and Stone (n 42) 24.

^[60] Kenny Annand, Wendy Lacey and Eileen Webb, Seniors Downsizing on Their Own Terms: Overcoming Planning, Legal and Policy Impediments to the Creation of Alternative Retirement Communities (Report, National Seniors Australia, 23 November 2015) 12 <https://apo.org.au/node/61951> .

^[61] Ibid.

^[62] Strata Schemes Development Act 2015 (NSW).

^[63] ‘How the Age Pension Could Be Impacted by Downsizing', BT (Web Page, 1 July 2021) <https://www.bt.com.au/personal/your-finances/retirement/how-the-age-pension-could-be-impacted-by-downsizing.html>.

^[64] Adair, Williams and Menyen (n 56) 17.

^[65] Hannah Leal et al, Housing Market Turnover (RBA Bulletin, March 2017) 22.

^[66] Orsetta Causa and Jacob Pichelmann, Should I stay or should I go? Housing and residential mobility across OECD countries (OECD Economics Department Working Papers No. 1626, 21 October 2020) 8.

^[67] Australian Bureau of Statistics, Population Shift: Understanding Internal Migration in Australia (Catalogue No 2071.0, 22 May 2018). <https://www.abs.gov.au/ausstats/abs@.nsf/Lookup/by%20Subject/2071.0~2016~Main%20Features~Population%20Shift:%20Understanding%20Internal%20Migration%20in%20Australia~69>

^[68] Martin Bell et al, ‘Internal Migration and Development: Comparing Migration Intensities Around the World’ (2015) 41(1) Population and Development Review 38.

^[69] Australian Bureau of Statistics (n 67).

^[70] Ibid.

^[71] Thomas J Cooke, ‘It Is Not Just the Economy: Declining Migration and the Rise of Secular Rootedness’ (2011) 17(3) Population, Space and Place 194, 195.

^[72] Wilbur Zelinsky, ‘The Hypothesis of the Mobility Transition’ (1971) 61(2) Geographical Review 219.

^[73] Larry Long, ‘Residential Mobility Differences among Developed Countries’ (1991) 14(2) International Regional Science Review 133.

^[74] Cooke (n 69); Janette E Herbers, Arthur J Reynolds and Chin-Chih Chen, 'School Mobility nad Developmental Outcomes in Young Adulthood' (2013) 25(3) Development and Psychopathology.

^[75] Katrina Parkyn and Leah Ranie, Buying in NSW, Building a Better Future (Consultation Paper, King and Wood Mallesons, 18 March 2021) <https://www.kwm.com/en/au/knowledge/insights/consultation-paper-buying-in-nsw-building-a-better-future-20210318>.

^[76] Australian Government, Australia’s Future Tax System Review (Final Report, December 2009) 90.

^[77] Rodney T Smith, ‘Constitutional Reform Gone Awry: The Apportionment of Property Taxes in California after Proposition 13’ (1990) 23(3) Loyola of Los Angeles Law Review 829, 839.

^[78] Benjamin Ward, ‘The San Francisco Homes That Prove Why NSW Stamp Duty Changes Won’t Work’, The Sydney Morning Herald (online, 15 June 2021) <https://www.smh.com.au/national/the-san-francisco-homes-that-prove-why-nsw-stamp-duty-changes-won-t-work-20210614-p580te.html>.

^[79] Clyde Haberman, ‘The California Ballot Measure That Inspired a Tax Revolt’, The New York Times (online, 16 October 2016) <https://www.nytimes.com/2016/10/17/us/the-california-ballot-measure-that-inspired-a-tax-revolt.html>.

^[80] Liam Dillon and Ben Poston, ‘California Homeowners Get to Pass Low Property Taxes to Their Kids. It’s Proved Highly Profitable to an Elite Group’, Los Angeles Times (online, 17 August 2018) <https://www.latimes.com/politics/la-pol-ca-california-property-taxes-elites-201808-htmlstory.html>.

^[81] National Bureau of Economic Research, The Lock-in Effect of California’s Proposition 13 (Digest No. 4, April 2005) <https://www.nber.org/digest/apr05/lock-effect-californias-proposition-13>.

^[82] Mark Haveman and Terri A Sexton, Property Tax Assessment Limits: Lessons from Thirty Years of Experiences (Lincoln Institute of Land Policy, 2008) 30.

^[83] Davidoff and Leigh (n 24) 397.