Removing stamp duty for all first homebuyers will only push up prices in newer suburbs where houses are more affordable, a former Reserve Bank economist predicts.
The Australian Capital Territory on July 1 will become the first state or territory where every property newcomer will be spared from having to pay the hated transfer duty that runs into the tens of thousands of dollars that could otherwise buy a car or an overseas holiday.
No price caps or a requirement for a first homebuyer to purchase something brand new will apply.
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But Peter Tulip, a former senior research manager at the Reserve Bank of Australia, said the money saved in having to pay upfront stamp duty would see first homebuyers actively compete for more affordable homes in newer suburbs.
“It’s not dollar for dollar but you certainly can bid more aggressively than you would have otherwise,” he told The Nightly.
“This is a demand-side stimulus and like all demand-side stimuluses, it means upwards pressure on prices so while you’re helping a small number of beneficiaries, you’re worsening affordability for everybody else.
“This particular change, it may have an effect in the ACT, particularly in the new suburbs where first homebuyers are active.”
Under the first homebuyer exemption, an individual or a couple buying a median-priced $600,000 apartment in Canberra will be spared having to pay $15,677 in stamp duty or the discounted $12,685 rate for owner-occupiers.
Stamp duty is also being removed for all owner-occupiers buying a brand-new unit.
The first homebuyer of a mid-point priced $1 million house won’t have to pay $39,516 to the ACT Government, or the discounted $36,524 rate for owner-occupiers.
Across the border in NSW, a first homebuying couple buying the same $1 million house would be required to pay $41,217 to the State Government.
First homebuyers in NSW can apply for a full exemption from stamp duty if the property is valued at less than $800,000 but that would only buy a house in a regional house or a unit in Sydney.
A concession stamp duty rate is available for first homebuyers settling on a property valued between $800,000 and $1 million.
NSW had previously removed stamp duty for first homebuyers but only if they bought a brand-new home from 2012 to 2017 during an era when newly built units had quality issues arising from bad private certifiers failing to find faults during the construction phase.
Queensland adopted that policy in May 2025, giving first homebuyers a full stamp duty exemption on new homes and vacant land.
First homebuyers purchasing an existing property worth up to $700,000 can also get a stamp duty waiver, with a concessional rate applying up to $800,000.
The previous NSW Coalition government’s 2022 Budget had offered first homebuyers the alternative of a land tax instead of an upfront stamp duty bill but the incoming Labor Government in 2023 abolished that.
Despite that setback Dr Tulip, who is now the chief economist with the Centre for Independent Studies, sees the ACT Government’s abolition of stamp duty for all first homebuyers as part of a long-term path for state governments to replace stamp duty with an annual land tax.
“These things do catch on eventually, but it does take a frustrating and surprising length of time,” he said.
