SA stamp duty abolition could drive up house prices: Brokers

Previously, FHBs were only exempt from stamp duty if they purchased a newly built home that cost $650,000 or less. The exemption threshold has now been removed.

The South Australian government said that the abolition of stamp duty on new builds for FHBs would bolster housing supply and support young people in entering the market.

According to Nick Champion, the Minister for Housing and Urban Development, the key to tackling the housing undersupply crisis is to increase supply “at all levels of the market”. Minister Champion said that abolishing stamp duty for FHBs would help more young people to build their first homes.

Speaking with The Adviser, Craig Parry, senior finance broker and partner at Crown Money, said the abolition of stamp duty for FHB is going to be “very welcomed into the market” as the median house price in Adelaide has exceeded $900,000 and FHBs have had a “difficult time” in the market.

Nick Bartel, broker with MoneyQuest in south eastern Adelaide Hills, told The Adviser: “First home buyers are the ones who are out of the market at the moment, so anything to help them out is good.” Bartel noted, however, that the policy may drive up house prices even further.

Steven Voroniansky, director and senior finance broker at Time2Refinance, echoed similar sentiments, saying that he is “interested to see what the ripple effect” will be on house prices following the introduction of the policy.

Voroniansky noted a listing he had seen for a newly built home that increased $150,000 overnight following the government’s announcement to remove stamp duty for FHBs that buy a new home.

As part of the government’s housing measures, it also announced that it would be allocating $843.6 million to build and upgrade 2,383 homes. A total of $567 million of the allocated funding will go towards redeveloping SA Housing Authority land in Seaton.

To increase available social housing in South Australia, the state government has allocated $135.8 million over five years to upgrade and build 442 social homes by 30 June 2028, which has been funded by the federal government’s Social Housing Accelerator Payment.

The federal government will provide South Australia with $67 million to expedite housing development and new social housing as part of the new National Agreement.

What should have been in the budget?

Following the announcement of the 2024–25 budget, we asked brokers what they thought was missing from the budget’s housing measures that would support their clients in entering the property market.

Parry said that the First Home Guarantee’s property price cap of $600,000 should be increased to be in line with the average house price in Adelaide.

The First Home Guarantee is available through the federal government’s Housing Guarantee Scheme and allows FHBs to purchase a property with a 5 per cent deposit without paying lenders mortgage insurance.

Voroniansky also said that increasing the property price cap would be beneficial for buyers. He said: “You can’t buy a house for $600,000 in South Australia, so I think the cap needs to be increased to around $850,000.”

Bartel, however, said that increasing property price caps on the Housing Guarantee Scheme as well as the First Home Owners Grant (which provides FHBs with a $15,000 grant if they purchase or build a new home) were “Band-Aid fixes that are kicking the can down the road”.

He also said that the Liberal’s proposed superannuation policy that would allow Australians to access their super to fund a house deposit would further increase house prices as all buyers would have access to increased funding.

Voroniansky said that the budget housing measures were not supporting buyers who wanted to purchase an existing home.

[Related: 26k helped by Home Guarantee Scheme: Minister]