Stamp duty discounts can help first-home buyers get into a home faster, but rapidly rising property prices across Australia are making it harder to secure these tax breaks.  

Most state and territory governments offer stamp duty exemptions and concessions for first-home buyers, so long as the property value falls under a certain price threshold.

But as property prices surge across the country, the pool of eligible properties falling within these price caps continues to shrink, forcing many first-home buyers to either stump up large upfront fees or compromise on location or property features to secure a home.

State governments in Queensland, South Australia, Western Australia and Tasmania have announced changes to their first-home buyer stamp duty measures in recent months in an attempt to improve access, but there are questions of whether they go far enough.

The Queensland government this week announced plans to raise the stamp duty concession cap from $500,000 to $700,000.  

Harcourts chief executive Adrian Knowles praised the changes, saying stamp duty concessions can speed up a purchase by six to 12 months, easing pressure on the tight rental market.

"Increasing these thresholds will only have a positive effect on buying capacity, allowing future home owners to enter the market sooner," he said.

PropTrack senior economist Eleanor Creagh said while the higher price cap means more choice for first-time buyers in Queensland, under the revised caps, less than half of the homes in Brisbane would qualify for the discount.  

Queensland Premier Steven Miles has increased the state's stamp duty exemption cap for first-home buyers to $700,000. Picture: Chris Hyde/Getty

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Brisbane has been one of the strongest capital cities in recent years, with home values rising 13.7% to $834,000 over the past year, according to the latest PropTrack Home Price Index.  

“Removing the caps all together could make it easier for more first-home buyers to purchase homes without the added financial burden of stamp duty, increasing overall accessibility to the housing market given the additional burden that stamp duty entails in accessing the housing market,” Ms Creagh said.  

“Though any measure increasing or bringing forward demand for housing should be matched with efforts to increase housing supply to sustainably improve affordability.” 

'Outdated' price caps falling behind the curve

With housing affordability at its worst level in three decades, first-home buyers who purchase a home with a stamp duty exemption or discount can save tens of thousands of dollars and help them get onto the property ladder sooner. 

But Ray White head of research Vanessa Rader said it's important the price thresholds at least keep up with rising home prices. 

"Given the rising home prices, it's important that these thresholds keep up with changing median prices, allowing first time buyers greater choice when purchasing their first home, and not be restricted and possibly miss out on savings based on thresholds set based on historical data," Ms Rader said.

A larger deposit may also help first-home buyers avoid paying costly Lenders Mortgage Insurance (LMI), which lenders typically require when borrowers haven't saved a 20% deposit on top of other upfront costs.

Ms Rader said any change to legislation that reduced fees and taxes on first-home buyers in order for them to get into the property market was welcomed.  

But others say increased stamp duty price thresholds don't go far enough.  

Calls to abolish stamp duty barrier entirely

Propertyology head of research Simon Pressley said state governments should abolish stamp duty entirely and replace it with an annual tax. 

“The problems associated with this draconian tax run much deeper than being a barrier for first-home buyers,” he said. 

“It takes far too much money from so few people while simultaneously locking out millions of others from achieving life’s biggest goals.” 

The South Australian government abolished stamp duty discount price caps recently for first-home buyers who purchased or built a new home in the state. Picture: Getty

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Property Council chief executive Mike Zorbas said raising stamp duty thresholds was always a short-term fix.  

He said raising stamp duty thresholds would help part of the current generation of home buyers into a home, but nowhere near as much as fixing the country’s 'broken' planning systems and high levels of housing taxation.  

“Greater supply of homes is the only way to put sustained downward pressure on the cost of new and existing homes,” Mr Zorbas said.  

“Australia needs significant national tax reform centred on a higher, broader-based GST with a fair safety net that allows us to do away with these famously inefficient taxes.” 

First-home buyers can save tens of thousands of dollars by taking advantage of stamp duty discounts. Picture: Getty

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The South Australian government last week announced it would abolish stamp duty discount price caps entirely for first-home buyers who purchased or built a new home in the state. 

In May, the Western Australian government increased its stamp duty price cap by just $20,000 to just $450,000 despite the Perth median home value climbing more than 20% year-on-year to almost $700,000. 

The Tasmanian government has committed to cutting stamp duty for first-time buyers that purchased any home valued up to $750,000, replacing its previous 50% discount. Picture: Getty 

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Earlier this year, the re-elected Tasmanian government confirmed that it would cut stamp duty for first-time buyers that purchased any home valued up to $750,000, replacing its previous 50% discount. 

A recent PropTrack-e61 Institute research report found that stamp duty costs have grown at least fourfold for median-priced homes in Australia’s capital cities compared to average incomes since the early 1980s.