Sydney suburbs where first home buyers could save on stamp duty

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Key points

  • First home buyers could see stamp duty waived on typical houses in one in six suburbs, under proposed increases to price caps.
  • Unit prices in one in two suburbs would qualify for a duty exemption, up from a quarter of suburbs in 2017.
  • But experts are concerned by the changes, saying first home buyer incentives push up prices.

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Sydney first home buyers could soon access significant stamp duty savings in dozens more suburbs, figures show, but experts warn it comes at a cost.

Median house values in about one in six Sydney suburbs would be eligible for a first home buyer stamp duty exemption under proposed increased eligibility price caps, up from just 2 per cent in April, the figures show.

Median house values in about one in six Sydney suburbs would fall under proposed new price caps for first home buyer stamp duty exemptions.Credit: Dion Georgopoulos

The exemption would also apply for median unit values in more than half of suburbs – including Stanmore, Macquarie Park and Brighton-le-Sands – up from 28 per cent, if the price cap is lifted from $650,000 to $800,000 from July 1, as proposed by the NSW Labor government.

Dozens more suburbs would also be eligible for stamp duty concessions, with the threshold set to rise from $800,000 to $1 million – surpassing median unit values in Redfern, Collaroy and Cronulla among other suburbs, and house values in suburbs such as Wiley Park and Quakers Hill.

Many of the suburbs are those that pushed above eligibility caps after they last changed in mid-2017. But there are also new additions, given that only 11.3 per cent of house medians and 25.2 per cent of unit medians were eligible back then.

Meanwhile, about a quarter of suburbs have house and unit values sitting between $1 million and $1.5 million, for which first home buyers could soon be ineligible for support as the government looks to scrap former premier Dominic Perrottet’s property tax option – which replaced stamp duty with a smaller annual land tax on homes worth up to $1.5 million. More than half of those who have opted in for land tax to date purchased in this price range.

CoreLogic Australia’s head of research, Eliza Owen, said higher price caps would make stamp duty relief possible in more suburbs, but they would largely benefit buyers in the city’s middle and outer rings and could drive up prices as first home buyers redirect money saved for stamp duty towards their deposit.

“It might bring a new range of markets into their consideration, but at the end of the day, we need to be wary of the impact that demand-side policies have on prices,” Owen said.

“First home buyers have been very responsive to changes in grants and concessions in the past, but … a lot of research has shown, including the Productivity Commission … that these [approaches] tend to put upward pressure on prices.”

Higher price caps combined with a market downturn have increased the number of suburbs first home buyers can look to, but this could quickly shrink if the market’s recent price gains continue, Owen said.

The Grattan Institute’s economic policy program director, Brendan Coates, said stamp duty concessions and exemptions brought forward purchases that would typically occur anyway, and pushed up prices, making it hard for future buyers.

“What the NSW government is going to give in one hand the housing market will take away with the other,” Coates said. “If you give first home buyers more purchasing power … the winners will be those that are selling homes … that qualify for new concessions.

“We should always be really careful about demand-side intervention because the larger you make [these schemes], the more they’re likely to just push up prices.”

Coates and Owen said governments should be focused on increasing housing supply, not buyer demand, to improve affordability.

Both would like to see stamp duty swapped for a broad-based land tax for all home buyers and owners.

Felisa Zen has purchased an off-the-plan apartment in Zetland. While the suburb’s median unit price could soon be eligible for a stamp duty concession, her two-bedroom unit would not. Credit: Peter Rae

First home buyer Felisa Zen, 30, considered the property tax when buying a two-bedroom apartment in Zetland last month, but decided against it as she hopes to hold the unit at The Frederick in Green Square, by Mirvac, long term. Having spent more than $1 million on the yet-to-be-completed unit, she would be ineligible for stamp duty relief, but she still wished she had been aware of the looming changes.

“That would have been part of my decision-making process,” Zen said. “I would have waited to see [if I could buy for] less than $1 million [come July].”

However, given her preference to live in inner Sydney – particularly after seeing friends struggle with long commutes after buying houses in outer suburbs – she knows how difficult it would be to find a two-bedroom unit below seven figures.

Stuart Penklis, chief executive of development at Mirvac, said uncertainty over interest rates and the construction environment were making it challenging for first home buyers.

He welcomed changes that focused on housing affordability, including incentives for first home buyers, but said that increasing the quantity and diversity of housing was the most important way to address affordability.

Buyers’ agent Rich Harvey, chief executive of, said higher price caps would not suffice to provide real support to first home buyers.

“It’s still not enough,” Harvey said. “For a basic first home, they’re going to [need to be looking] in very much fringe suburbs and small properties. More people will qualify … but all this does is fuel demand for lower-priced properties; this does nothing to address the supply issue.”

Harvey said there had been an uptick in enquiry this week with buyers fearful they may miss their chance to opt in to the property tax.

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