To increase housing supply and help first-time home buyers, the South Australian government has removed Stamp duty for new home purchases. This policy, introduced in the 2024-25 State budget, aims to make it easier for young people to own homes. However, brokers worry that it might cause house prices to rise.
What’s Changed?
Previously, first-time home buyers in South Australia didn’t have to pay stamp duty only if their new home cost $650,000 or less. The new policy removes this limit, so any new home bought by a first-time buyer is now free from stamp duty.
Government’s Perspective
The Minister for Housing and Urban Development, said that increasing housing supply at all levels is key to solving the housing shortage. By removing stamp duty for First-time home buyers, the government wants to encourage more young people to build their first homes, which will help increase housing availability.
Broker Insights
The Welcome Relief
Experts say the policy will be “very welcomed into the market,” especially since Adelaide’s median house price is now over $900,000. Parry noted that first-time home buyers have struggled significantly, and this policy could provide much-needed relief.
Price Rice
However, not all feedback is positive. Experts in the southeastern Adelaide Hills acknowledged that while helping first-time buyers is good, the policy might unintentionally cause house prices to rise. They also noted that the price of a newly built home increased by $150,000 overnight after the announcement.
Housing Measures
Besides abolishing stamp duty, the state government announced an $843.6 million investment to build and upgrade 2,383 homes. This includes $567 million for redeveloping SA Housing Authority land in Seaton. Additionally, $135.8 million over five years will be allocated to upgrade and build 442 social homes, funded by the federal government’s Social Housing Accelerator Payment.
What’s Missing?
Despite these initiatives, brokers identified gaps in the budget’s housing measures:
- First Home Guarantee’s Property Price Cap: Experts suggested raising the cap from $600,000 to match Adelaide’s average house price. This federal scheme allows first-time buyers to purchase with a 5% deposit without paying lenders mortgage insurance.
- Support for Existing Home Buyers: Experts noted a lack of support for those wanting to buy existing homes, which is a significant oversight given the current market dynamics.
- Long-Term Solutions: Experts criticized short-term fixes like increasing property price caps and grants. They also opposed the Liberal’s proposed superannuation policy, which would allow Australians to use their superannuation to fund house deposits, fearing it would further inflate house prices.
Conclusion
Removing stamp duty for first-time home buyers building / buying a new home in South Australia is a well-intentioned policy designed to help young buyers. However, brokers worry it might unintentionally drive up house prices. While the state government’s broader investments in housing are good, it’s important to meet the needs of all buyers and focus on long-term solutions for a stable housing market. The real impact of the policy will become clearer as the market adjusts.
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