Stamp duty concessions for first home buyers in Queensland need to be dialed up

In December 2023, first home buyers represented 33.3% of home purchasers in Queensland (Source: ABS), which is significantly lower than the ratio in most other states in Australia (see below).

A well thought out plan to raise the ratio of Queensland first home buyers to the national average of 38% could help thousands of extra Queenslanders gain the security and joy of owning their own home. The Queensland Government should begin the long journey of replacing stamp duty with a more efficient form of land tax.

Similarly, supply-side reform that makes it cheaper and easier to build new homes must be pursued with rigour.

Government assistance to first home buyers is only available for properties under a certain value – this is known as the property value cap. The current generation of first home buyers must be supported by increasing the  property value cap of the first home concession. Presently capped at $550,000, the first home concession should be lifted in order to apply to homes that resemble the median price of a home in Brisbane (presently $787,217). 

Note: Dwellings includes loan commitments for construction of dwellings, purchase of newly erected dwellings and purchase of existing dwellings.

Source: Lending Indicators December 2023 – Australian Bureau of Statistics

What is stamp duty

A duty is a tax applied by the state government on certain types of transactions. It can apply to everything from insurance through to vehicle registration. When it applies to the transfer of property, it will be referred to as transfer or stamp duty.

When it comes to stamp duty on land or house purchases, every state has a different set of rules and rates of duty.

Let’s use purchasing a home in Queensland to demonstrate how stamp duty works.. When a buyer signs a contract to purchase a block of land or existing home, the price will generally be the dutiable value. That is, the amount by which the duty payable will be calculated. 

There are always exemptions and differences, but this is how the majority of calculations work. In Queensland, the duties at different purchase prices are as follows:

 It’s also worth noting that an additional duty of 7% applies to purchases of residential land by foreign persons (including companies and trusts). Find out more about the additional foreign acquirer duty here.

The median home in Brisbane example

When talking about real estate it is more realistic to talk about the median house price than the average (in other words the middle price of all the houses sold regardless of how many were sold in each price bracket).

In December 2023, the median dwelling (code for any type of home – e.g. houses, units, apartments) value in Brisbane hit $787,217. For a house bought at that price, an estimated $28,543.50 of stamp duty would be payable by the buyer at settlement.

The stamp duty concession example in Queensland (QLD) example

There are several concessions that can reduce the amount of stamp duty payable buy a purchaser in Queensland.

The home concession applies to all purchasers who intend to live in the property they’re purchasing. The modified duty rates are below.

For that median Brisbane dwelling of $787,217, a buyer claiming the home concession would pay stamp duty of $21,278 (a discount of around $7,000).

The first home concession is an additional discount for first home buyers and is applied on top of the home concession. It only applies to homes valued under $550,000 and can reduce stamp duty by a maximum of $8,750.

For a first home buyer purchasing that median Brisbane dwelling, the stamp duty payable would still be $21,278.

This indicates that for a first home buyer looking to buy the home that sits at the exact mid-point of valuations (i.e. the home that has 50% of homes valued both higher and lower than it) the first home concession provides no additional relief from stamp duty.

The appropriateness of this is something discussed in the next section.

It should be noted that there are two other relevant concessions and grants that are available to home buyers in Queensland.

First home buyers of new homes valued at less than $750,000 in Queensland are also eligible for the first home owner grant. This has recently been increased from $15,000 to $30,000 for contracts signed between 20 November 2023 and 30 June 2025.

Additionally, the first home vacant land concession is available for Queenslanders that are acquiring vacant land to build their first home. The concession only applies to vacant land valued under $400,000 and effectively discounts stamp duty by up to $7,125.

Young people need help now; increase the first home concession.

Introduced in the late 2000s, the home and first home concessions were introduced by the Queensland government to act as a step ladder for the youngest generation of homebuyers aspiring to the great Australian dream.

Many commentators have argued that this discount on stamp duty, along with associated grants, have simply acted as a subsidy that increases purchasing power and has further contributed to price increases in the market.

At the macro level, this may be true, but these subsidies actually level the playing ground for first home buyers competing with property investors who have their own set of tax treatments indirectly lifting purchasing power.

For the generation of home buyers that have to live in the system as it exists today, the first home concession is a necessity. LongView has close to a decade of experience helping home buyers find their new home and property investors manage their rental properties. Repeatedly seeing our clients secure their first home, with the assistance of the first home concession, leads us to the view that it needs to be extended to properties with a value significantly greater than the current cap of $550,000.

Let’s be clear, the home and first home concessions are far from perfect, but they need to be maximised in the meantime while the Queensland Government addresses the long-term structural reforms required to improve the local housing market.

Stamp duty in Queensland (QLD) is broken

Stamp duty discourages homeowners from moving house when their needs change. For example, an older couple may refrain from selling their family home after their children move out, as to buy a smaller replacement home will require paying stamp duty for a second time. This is something economists dislike, as it artificially reduces the number of homes changing hands and increases the number of unmet needs being tolerated by Australians.

All taxes distort markets, but some are worse than others. Back in 2015, Deloitte Access Economics estimated that around 340,000 property transactions are forgone each year due to the presence of stamp duties. Broken, indeed.

The 2009 Henry Review, which was commissioned by the Rudd Government, made 138 recommendations, including abolishing stamp duty in favour of transitioning to revised land tax. Ultimately, reform in this area has always been the duty (pun not just intended but celebrated) of State Governments.

With transfer duties in Queensland forecast to reach $5.385bn or 24.5% of total taxation revenues in 2023-24 (the bulk made up by stamp duty on land), it is of no surprise that genuine consideration to reform has been avoided by successive governments.

The political capital required to convince the largest groups of voters who are beneficiaries of the status quo (those that do not need to move often), teamed with navigating revenue neutral transitional arrangements has proven beyond the ability of successive governments from all sides of the political compass.

It is not all doom and gloom, however. The ACT is approximately halfway through its own reform program. While NSW and Victoria have commenced or announced limited reforms to stamp duty which could be considered a first step on the way to meaningful change.

Transitioning away from stamp duty would represent the first significant tax reform since the introduction of the GST in 2000 (which is now overdue for its own tune up). The lesson for governments here is that the juice will be worth the squeeze for future generations. 

Reform to stamp duty needs to be accompanied by supply-side reform. 

For most problems, there can be two sides to the story. When it comes to economics, the story has the two sides of supply and demand.

Our earlier discussion of stamp duty and associated concessions are what is known as demand-side. Tweaked, replaced, increased or decreased, changes to stamp duty will increase or decrease how much buyers can afford to spend on a new home.

Supply-side candidates for reform are those that either directly or indirectly decrease the cost of developing and constructing new homes, thereby increasing the incentive to build more. This is an overly simplistic definition, but sufficient to illustrate here.

The Queensland government (and all state governments for that matter) must review and develop reform packages to supply-side factors including:

• Zoning laws and building regulations
• Health, education and transport infrastructure (both public transport and road)
• Building material supply chain stability
• Skilled labour training

There is no shortage of public policy and industry expert research in these areas. If this advice continues to be avoided by state and local governments, the efficiency of any reforms to stamp duty will be severely limited.