Where first-home buyers in Brisbane will save most from raised concessions

Eleanor Creagh
Eleanor Creagh

Stamp duty discounts can help first-home buyers purchase their first home more quickly, but the substantial increase in home prices across Australia in recent years have made fewer homes eligible for exemptions and concessions.

For first-home buyers, stamp duty significantly slows the path to purchase because it is an upfront additional cost on top of the deposit that buyers need to save.

For most first-home buyers, saving a deposit is the most significant hurdle in accessing home ownership.

The stamp duty exemption for first-home buyers in Brisbane has increased from $500,000 to $700,000. Picture: Getty

Not only has saving for a deposit become harder as house prices have grown faster than incomes, but stamp duty adds to that hurdle.

Stamp duty brackets have not kept up with growing prices. This process of 'bracket creep' means most buyers are paying more stamp duty relative to the cost of the home than was once the case.

This is why most state and territory governments offer stamp duty exemptions and concessions for first-home buyers, so long as the property value falls under a certain price threshold.

Why Queensland raised the concession threshold

Earlier this month, the Queensland government announced the stamp duty concession threshold for first-time buyers would increase from $500,000 to $700,000.

The $500,000 threshold had become outdated, meaning the concession was largely redundant given the significant increase in Brisbane property prices.

Far fewer homes are eligible for the concession now than when the concessions were introduced, and fewer home buyers can take advantage.

Home prices in Brisbane have surged 68% since March 2020, with Brisbane now on par with Canberra as the nation’s second most expensive capital.

Home prices in Brisbane have surged 68% since March 2020. Picture: Getty

The median value of a home in Brisbane is currently $834,000, with a median house costing $930,000 and unit $632,000 – both well above the current $500,000 threshold.

As a result, the pool of eligible properties in Brisbane falling within the current price caps has shrunk, with more than half of Brisbane SA3 regions having 4% or fewer properties eligible based on median dwelling values in May 2024.

This means many first-home buyers in Brisbane would be adding to their deposit hurdle with large upfront fees or compromising on location or property type to secure an eligible home and save on those upfront costs that delay home ownership.

With housing affordability at its worst level in three decades, first-home buyers who can purchase a home with a stamp duty exemption can save a significant upfront cost, helping them purchase sooner.

But even in regions with a greater share of affordable homes, fewer than a quarter fall under current $500,000 threshold.

For example, the SA3 regions with the highest share of eligible homes under the current $500,000 cap include Brisbane Inner (22%), Springwood-Kingston (18%) and Beenleigh (16%), based on median dwelling values in May 2024.

This means that many of the homes that first-home buyers might want to buy are not eligible for the concessions.

Where the updated concessions will have the biggest impact

Increasing the cap to $700,000 is a necessary measure to keep up with the surge in Brisbane property prices that has made conditions for first-home buyers difficult.

The higher price cap means more homes are eligible, giving first-home buyers more choice.

This will make it easier for more first-home buyers to purchase homes without the added financial burden of stamp duty, increasing housing accessibility.

These changes will have the biggest effect in areas where median prices are close to the caps.

Now in Ipswich Inner, Beenleigh, Caboolture, Beaudesert, Springfield-Redbank and Springwood-Kingston, more than half of homes fall under the new price caps.

Ipswich Inner, Caboolture, Beaudesert, and Beenleigh will see the greatest increase in share of eligible homes with about 50% more homes eligible under the new cap.

For example, in Ipswich Inner the new cap will mean 65% of homes would be eligible, up from just 12% with the current cap. In Caboolture the new cap will mean 61% of homes would be eligible, up from just 10% with the current cap.

Do the concession changes go far enough?

The first-home buyer concession reduces the time to save to purchase, and increasing the caps are necessary and welcome, but does this move go far enough?

Absent reforms to stamp duty overall, the Queensland government’s changes to concessions will help, but the concessions are still capped at fairly low prices.

While it’s clear that a more-affordable, entry-level home, or properties in more affordable peripheral regions like Ipswich, Caboolture, and Beaudesert may be eligible for stamp duty concessions, median-priced dwellings in Brisbane will not be eligible under the raised threshold.

In particular, the caps mean that just 20% of houses in Brisbane fall under the new price caps. Instead, first-home buyers are mainly restricted to apartments given 60% of units in Brisbane fall under the new price caps.

In many parts of the city this spread is even more extreme. For example, in Capalaba the new cap will mean 84% of units would be eligible compared to just 1% of houses. It’s a similar situation in Sandgate with 78% of units eligible under the new caps, compared to only 4% of houses.

In more affordable peripheral regions, there is a more even mix. In Ipswich Inner, 84% of units and 63% of houses would be eligible under the new caps, while in Caboolture 94% of units and 55% of houses would be eligible.

It's clear that even with the raised stamp duty concession threshold, many first-home buyers will be forced to compromise on location or property type to secure a home that is eligible.

Reforming stamp duty

While increasing the caps is a step in the right direction, reforms to stamp duty overall would go further.

Eliminating stamp duty entirely and replacing it with an annual tax would help first-home buyers by lowering purchase burdens and shortening how long it takes to save to buy a home. This could help arrest the decades-long decline in home ownership rates.

Stamp duty is an inefficient tax because it discourages people from moving to homes that suit them. That discourages people from downsizing, from moving for work or changing jobs, and makes it harder for first-home buyers to save a deposit.

Though any measure increasing or bringing forward demand for housing should be matched with efforts to build more homes and increase housing supply to sustainably improve affordability.

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