The Chief Minister of the Australian Capital Territory has called for the abolition of stamp duty for first home buyers and first home owner grants to improve housing affordability.
On Friday (16 February), Chief Minister Andrew Barr called on state and territory governments to abolish all stamp duty for first home buyers to “make a real difference on housing affordability across the country”.
Speaking to the committee for economic development of Australia in Canberra, Mr Barr said: “Every economist in the country agrees that stamp duty is an inefficient tax, and one that puts another hurdle in front of first home buyers by forcing them to either borrow or save tens of thousands of dollars on top of the cost of housing.
“While most jurisdictions have concession or exemption schemes — including the ACT — the eligibility thresholds often lag behind the real price of a home in today’s markets.”
The change, if accepted by governments, would expedite the government’s 20-year plan to abolish stamp duty on all home transactions.
Mr Barr also outlined that the tax could be cut “in a fiscally sustainable way” by removing the first home buyer (FHB) grants that are in place in several states and territories.
He said: “These grants no longer serve the purpose for which they were created — and arguably make housing less affordable.”
Elaborating, the Chief Minister said: “They fuel price growth by adding many times their dollar value to the borrowing power of purchasers, and [they] distort decisions about where and what property people buy — channelling demand into particular segments of the market, driving up prices further.”
The ACT Chief Minister concluded: “Through this proposal to abolish first home owner stamp duty and grants across Australia, we can deliver far more effective support to those trying to buy their first home.
“We are prepared to do this in the ACT by accelerating the removal of stamp duty specifically for first home buyers ahead of our broader phase out.
“I will be putting this on the agenda for discussion at the next meeting of state and territory treasurers to ask my colleagues to do the same.”
Mr Barr’s comments come amid a rise in first home buyer activity. According to a recent Adelaide Bank/Real Estate Institute of Australia Housing Affordability Report, the number of first home buyers purchasing homes rose by 32.6 per cent in the year to September 2017, and 22.8 per cent more when looking at the September quarter with the prior comparative period.