First home owner grants barely covers stamp duty: HIA

First home owner grants barely covers stamp duty: HIA
Jennifer DukeDecember 11, 2014

The Housing Industry Association’s (HIA) latest Stamp Duty Watch report has criticised first home owners grants, noting that in the majority of states the grant doesn’t even cover the stamp duty bill, even when considering stamp duty concessions.

HIA senior economist Shane Garrett looked closely at the different states and the effect of grants and concessions for first home buyers, concluding that the result is unimpressive.

“While FHBs receive grants from state governments and concessions on stamp duty in several states, the overall effect of these supports is unimpressive,” said Garrett.

If buying a median priced new home, he said that New South Wales, Victoria and Western Australia will cost more than the grant on the stamp duty bill alone. In South Australia and the ACT, they are left with a few hundred dollars.

Of course, first home buyers will not always look at median priced homes and this equation does look somewhat more attractive as the price is reduced and, subsequently, the stamp duty cost decreases.

“Stamp duty bands and rates do not respond to episodes of strong price growth,” he said, saying it had detrimental effects on home affordability.

“The tax adds hugely to household indebtedness by forcing monthly mortgage repayments upwards. Reform aimed at reducing the burden of the tax must become a priority for both state and federal governments,” he said.

 

Jennifer Duke

Jennifer Duke was a property writer at Property Observer

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