Stamp duty concessions must keep pace with rising prices, peak body says
The Real Estate Institute of Western Australia is calling on the WA government to lift the First Home Owner Rate (FHOR) duty-free threshold from $430,000 to $530,000, with the concessional rate threshold lifted accordingly.
“WA is the second most affordable place in the country and has the highest proportion of first home buyers in its owner-occupier market of any state or territory in the country – but more needs to be done to ensure first home buyers remain an active component of our local market,” REIWA president Damian Collins wrote in a blog. “It is well known that stamp duty is one of the biggest financial imposts placed on first home buyers when trying to save for a home.”
Collins said that stamp duty “actively discourages” homeownership and makes it “significantly more difficult” for people to get a foot on the property ladder.
“It also adds to the debt buyers take on, costing thousands of extra dollars over the life of the loan,” he said.
The FHOR is a concessional rate of stamp duty applied to the purchase of a home or vacant land for first-home buyers. Collins said the program has been “hugely successful” in Western Australia, and is a key reason why many Western Australians have been able to purchase homes.
“It is important that the WA market remains accessible for first home buyers,” Collins wrote. “We have seen strong price growth across the state over the last 18 months. The Perth median house sale price now sits at $525,000, while the current FHOR duty-free threshold remains at $430,000.”
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Collins said that one way to ease the financial burden on first-home buyers was to make sure the duty-free rates and concessional rates “remain reflective of where the market is at.”
Collins said that major stamp-duty reform needed to be on the WA government’s “medium-term agenda.”
“However, there’s no reason why we shouldn’t undertake meaningful micro-reform now that will help people get on the property ladder,” he said. “Smaller, practical reforms like increasing the FHOR threshold to reflect the current median house sale price would ease the cost burden on first home buyers and importantly also help to free up rental stock when we have a rental shortage.”
