Queensland mortgage and property industry experts are urging the state government to prioritise stamp duty reform over other housing initiatives that they say “do nothing” to alleviate the pressure on the housing market.
The Sunshine State’s first home concession currently applies to a home valued under $550,000 with no stamp duty paid for residences under $500,000.
However, the median dwelling value for Brisbane is over $770,000 for November, according to CoreLogic data.
The calls come after the Queensland government doubled the First Home Owner Grant (FHOG) to $30,000 when building or purchasing a new home despite many new builds costing well-above the $750,000 threshold.
“The stamp duty concession is also unusable in today’s market in Queensland at $500,000,” said Alex Gee (pictured far left), director of Brisbane-based brokerage Kingfisher Finance Group.
“It also needs to be realigned to NSW, where a full exemption from transfer duty will be available if you are buying a new or existing home valued up to $800,000, while homes valued over $800,000 and less than $1,000,000 may qualify for a concessional rate,” Gee said.
“Why should a first home buyer north of the Tweed pay $25,000 in stamp duty, but $0 a few kilometres down the road in NSW?”
Far from a Queensland issue, stamp duty has been a crucial revenue generator for all states and territories for decades.
In the 2021-22 financial year, state governments collected a total of $35.7 billion from stamp duty, with tax rates ranging from 4.5% to 6.5% of the purchase price.
Queensland's stamp duty revenue reached $13.1 billion for the year ending June 2022, with a rate of 5.75%. While this rate is not the highest among Australian states, with Victoria’s current rate at 6.5% (though this will change in 2024), Queensland's stamp duty revenue has experienced a significant 108% increase over the past decade.
So, for Simon Pressley (pictured above centre left), director of Brisbane-based buyer’s agency Propertyology, the Queensland government’s plan to provide a “cost of living boost for first home buyers” came across as disingenuous.
“How can they pretend to ‘care’ about housing while charging each buyer of Queensland real estate tens of thousands of dollars per pop?” said Pressley. “How can they pretend to ‘care’ about social housing when they’ve only added a miserable 6,000 homes over the last 15 years, including building zero since 2021?” Pressley said.
“One in every three households depend on rental accommodation. How can they keep pretending to ‘care’ about having enough supply and containing rent prices when they continually tax and legislate against the very people who the community desperately depends upon to add more supply?”
For some brokers in Queensland such as Home Loan Experts senior mortgage broker Jonathan Preston (pictured above centre right), the government’s boost to the First Home Owners grant was a welcome move.
Preston said the Queensland market was already “pretty warm”, but a larger FHOG always helped.
“It is definitely good for both first home buyers and people who already own property in Queensland,” Preston said. “It’s pretty useful. Queensland prices are more modest so this will help a lot of people struggling with deposits, as long as they can meet the current harsh serviceability requirements.”
“For someone taking out the grant, if they have some savings and are trying to save more, this can bring forward their purchase. It will help a lot with the deposit for, say, properties in the range of $400,000 to $600,000.”
Still, the government’s intentions were far from altruistic, apparently pursued “due to political reasons”, according to Preston.
Home Loan Experts CEO Alan Hemmings agreed, saying “any increase to FHOG is good”. However, he is not sure of the size the benefit unless there is a “huge increase in new homes coming online in the time period”.
“There is a window of opportunity for first home buyers, as it does run to June 2025. Giving buyers time to find the right property and get it built,” Preston said. “I think it is more an election ploy than anything else. The government will be able to say they have supported first home buyers without necessarily fixing the issue – supply.”
Gordon MacVicar (pictured above far right), director of Mortgage Choice Peregian Beach and Noosaville on the Sunshine Coast, agreed that stamp duty needed to be addressed first as it was one the biggest barriers for first home buyers.
“We need wholesale stamp duty change for first home buyers for land and purchases,” said MacVicar. “It would get more homebuyers in the market as it won’t punish people who live in cities and regional centres.”
As an example, MacVicar imagined a first home buyer who has the First Home Guarantee (FHG), and they want to purchase for $700,000 in Queensland. For them to purchase at 95% LVR, they would need over $57,000 in deposit.
Of that figure, they are paying around $21,000 in stamp duty and other government costs.
“If you’re a first home buyer family, saving $35,000 is a fantastic effort in today’s economy. But you need to save an extra $21,000 to pay the government costs?” MacVicar said.
“Now imagine the family missed out on the FHG, they would have to spend another $22,000 on LMI – that’s around $43,000 in total costs, more than the 5% deposit of $35,000. It’s the biggest rort going.”
What do you think about Queensland’s First Home Owner Grant and stamp duty policies? Comment below.
