Eligible first home buyers purchasing property for less than $800,000 after July 2023 can see the state-based duty tax waived.
The change has already resulted in nearly 14,000 buyers avoiding stamp duty, which otherwise could have totaled as much as $30,735.
Thousands more took advantage of a concessional stamp duty rate applied to first homes worth between $800,000 and $1 million.
“For many young families, the considerable savings they can make on the cost of stamp duty is the difference between being able to purchase a home and missing out," NSW minister for finance Courtney Houssos said.
Many NSW buyers entering the market using the discounts purchased in Western Sydney and on the Central Coast.
Hubs in Western Sydney, such as Campbelltown, Penrith, and Blacktown offer median house prices of around $814,000, $870,000, and $930,000 respectively, according to realestate.com.au.
Meanwhile, Wyong and The Entrance, both located on the Central Coast, boast median house prices of $850,000 and $957,000.
Recent research conducted by PropTrack and e61 found that the typical stamp duty commanded on a Sydney property is equal to six months of a buyer’s salary.
Compared to relative income, stamp duty in Sydney is more than five-times higher now than it was 30 years ago.
“Home buyers in Sydney and Melbourne must save nearly $45,000 just to cover the stamp duty for a median-priced home,” PropTrack senior economist Angus Moore said.
“In the mid-1980s, stamp duty in Sydney was only around $1,500.”
The increase is largely due to rising house prices, which have outpaced growth in incomes over the past three decades, causing stamp duty ‘bracket creep’.
The states boosting stamp duty concessions
NSW isn’t the only state to have raised the threshold for stamp duty concessions in recent times.
South Australia slashed the stamp duty payable by first home owners purchasing a new property to zero last year, as long as they spend less than $650,000.
Meanwhile, discounts are offered to those spending up to $700,000.
Like Queensland, which doubled its first home owner grant, South Australia also made changes to its $15,000 First Home Owner Grant, expanding eligibility to those spending up to $650,000.
At the same time, Western Australia slashed the stamp duty payable by all buyers signing on to purchase new apartments by as much as 75%.
The discount could save a buyer handing over $650,000 for a new apartment in Western Australia as much as $18,668.
Simultaneously, Queensland opposition leader David Crisafulli promises to boost the stamp duty concession threshold available to first home buyers in the Sunshine State as part of this year’s state election.
Queensland offers stamp duty discounts of up to 100% for first home buyers purchasing property for under $550,000 – nearly $250,000 less than Brisbane's median dwelling price.
Could scrapping stamp duty solve the housing crisis?
However, NSW is the only state to have instated, then reversed course on, an alternative to stamp duty.
For a brief window prior to the 2023 state election, many NSW first home buyers could opt out of paying stamp duty.
Instead, they would pay an annual property tax, equal to $400 plus 0.3% of the land value of their property.
Prior to the revised thresholds, a first home buyer opting for land tax would have been better off for up to 16 years on a $1 million home instead of paying stamp duty.
“Stamp duty is an inefficient tax because it discourages people from moving to homes that suit them,” Mr Moore said.
Such inefficiencies is often cited as a strain on the housing market.
Australians of all ages have foregone moving home due to the threat of stamp duty and other transaction costs, according to a McKinnon Poll survey of 3,000 people in 2023.
It found nearly a quarter of potential downsizers in the nation’s cities have delayed shifting homes due to the looming tax.
Speaking to Savings.com.au, Propertyology head of research labelled stamp duty “a draconian dream destroyer”.
“[It] must be completely scrapped and replaced with a far more efficient initiative,” he said.
Image by Jo Quinn on Unsplash
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