SA abolishes stamp duty for FHBs buying new homes

First home buyers (FHBs) who purchase a new home valued up to $650,000 (or vacant land up to $400,000 to build a new home) will no longer have to pay stamp duty, the South Australian government has confirmed.

The move forms part of the SA state government's 2023–24 budget and intends to help more South Australians into home ownership while boosting supply of new homes in the housing market.

As well as the stamp duty abolition for FHBs buying new homes under $650,000, relief will be progressively phased out for properties valued up to $700,000. For the purchase of vacant land on which a new home will be built, stamp duty will be abolished on land valued up to $400 000, with relief phasing out for land valued up to $450,000.

According to the state government, the move could assist around 3,800 first home buyers each year.

The SA budget also increases the property value cap for the First Home Owner Grant (FHOG) from $575,000 to $650,000 for eligible contracts entered into from 15 June 2023.

The decision to increase the FHOG property value cap by $75,000 aims to "reflect the significant increase in land and build costs and more closely aligns the FHOG with Adelaide’s median house price of $675,000".

According to the state government, these measures mean that eligible FHBs who build or buy a new home with a value of up to $650,000 will now receive around $30,000 in stamp duty relief along with a FHOG payment of $15,000.

Addtionally, there will be increased access to HomeStart's interest free starter loan by lifting the annual income cap from $65,000 to $75,000 for singles, and $90,000 to $100,000 for couples.

Furthermore, the introduction of a new HomeStart loan will allow eligible FHBs building a new home to take out a loan with a two per cent deposit.

This is all part of a comprehensive $474.7 million housing package which supports the delivery of 3,600 new homes over five years and reduces the cost of housing for around a further 14,000 new homes, according to the South Australian government.

Specifically, the housing package will also aim to unlock 25,000 new blocks across the state's northern and southern suburbs; secure more public housing (564 new homes and halting the sale of a further 580 public housing properties); deliver over 1,200 more social and affordable homes including 700 affordable homes as part of the state's share of the National Housing accord.

Moreover, the package will be used to establish an office for regional housing and create a Regional Key Worker Housing Scheme to build more housing for teachers, police officers, health workers and other regional workers.

The South Australian government said it hopes the changes will encourage the supply of new housing with the intention of also taking pressure off the tight rental market, rather than increasing demand for existing homes.

South Australia Premier Peter Malinauskas said: “We’ve already announced the state’s largest-ever land release, significant reforms for renters and the first increase in public housing in a generation.

“Everyone deserves a home.

“Now, we’re taking the next step so that more people can own their own home.

“These reforms will slash almost $45,000 off the cost of an average new home for a first home buyer — making it easier for them to enter the market and cheaper for them to pay their mortgage.

“Importantly, this will also help stimulate new supply in the market, helping ease the housing crisis for everyone, and providing a pipeline of work for an important sector of our economy.”

Treasurer Stephen Mullighan said that abolishing stamp duty for FHBs “keeps their dreams of home ownership alive”.

“This provides an incentive for more supply, creating a pipeline of work for the building industry for years to come,” Mr Mullighan said.

“It’s about sustaining jobs, growing the economy, and helping as many South Australians as possible to realise the dream of home ownership, now and into the future.”

Victoria and NSW have also moved to change stamp duty laws, with Victoria announcing plans to abolish stamp duty for commercial and industrial properties, while NSW moved to introduce new legislation to lift the threshold for stamp duty exemptions and bring in concessions for FHBs.

[RELATED: Victoria to abolish stamp duty for property tax]

Adrian Suljanovic is a journalist at Broker Daily with more than two years experience reporting on all facets of the third party distribution channel.

Adrian has written for a range of business and finance titles including IFA, Investor Daily and Lawyer’s Weekly before joining the mortgages team in 2022.

He graduated from the University of Wollongong in 2021 gaining a Bachelor of Communication & Media with a major in Digital & Social Media.

E-mail Adrian at: This email address is being protected from spambots. You need JavaScript enabled to view it.