Stamp Duty Relief for First Home Buyers Is Welcome but Won’t Free Up Valuable Housing Stock

Alleviating stamp duty for first home buyers is a positive move forward but the NSW State Government also needs to provide fairer exemptions to encourage older Australians to downsize, according to LJ Hooker Group. 

The country’s most iconic real estate brand is calling for a reciprocal arrangement to provide an impetus for older Australians to make the transition to more suitably sized homes.

Mathew Tiller, LJ Hooker Head of Research and Business Intelligence, said the number of properties listed for sale is currently 20 per cent below the five-year average. Many Australians with large homes are hesitant to sell due to the high cost of stamp duty on their next purchase. 

“The Government’s focus on providing relief to first home buyers through stamp duty policies is a demand-side approach and while this is commendable, what is needed is a reciprocal supply-side policy,” Mr Tiller said. 

“By offering incentives that eliminate stamp duty for downsizing homeowners, there is the ability to balance the market and prevent measures that would inadvertently drive higher prices. 

“A reciprocal approach ensures fairness and without such a policy we will continue to see a chronic shortage of stock, so while people may find it easier to get into the market they will find a very limited choice of property available.”

From July 1, there will be no stamp duty for first home buyers purchasing a property with a sales price up to $800,000, saving them $31,000. There will be a reduced rate of stamp duty from $800,000 to $1 million. First-home buyers will need to live in the home for 12 months to receive the exemption. 

While new reforms will improve affordability for first time buyers, the LJ Hooker Group wants to see stamp duty abolished on property transactions altogether. 

The current system, which was introduced in 1865, provides a significant financial burden on all buyers, hindering mobility and distorting the property market.

“This is an outdated tax, the Government has the ability to improve affordability and foster a more efficient and equitable real estate sector simply by removing stamp duty from property purchases,” Mr Tiller said. 

“It stops people from downsizing and families from upsizing, and as a consequence keeps people in unsuitable homes for longer. In addition, it also prevents people who may need to sell due to a change in their situation such as divorce, death and unemployment.”