In its 2022-23 pre-budget submission, REIWA has called on the Western Australian Government to lift the First Home Owner Rate (FHOR) duty-free threshold from $430,000 to $530,000, with the concessional rate threshold lifted accordingly.
WA is the second most affordable place in the country for housing and has the highest proportion of first home buyers in its owner-occupier market of any state or territory in the country but more needs to be done to ensure first home buyers remain an active component of our local market.
It is well known that stamp duty is one of the biggest financial imposts placed on first home buyers when trying to save for a home.
Stamp duty actively discourages home ownership and makes it significantly more difficult for people to jump onto the property ladder. It also adds to the debt buyers take on, costing thousands of extra dollars over the life of the loan.
Time to increase the concessional rate of duty
The FHOR, which is a concessional rate of stamp duty applied to the purchase of a home or vacant land for first home buyers, has been hugely successful in WA and is a key reason why many West Australians have realised their dream of home ownership.
It is important that the WA market remains accessible for first home buyers. We have seen strong price growth across the state over the last 18 months. The Perth median house sale price now sits at $525,000, while the current FHOR duty-free threshold remains at $430,000.
One way to ease the financial burden on first home buyers is to ensure that the duty-free thresholds and concessional rates for first home buyers are reflective of where the market is at.
Stamp duty needs major reform and that is something that should be on the Western Australian Governments medium term agenda. However, theres no reason why we shouldnt undertake meaningful micro-reform now that will help people get on the property ladder.
Smaller, practical reforms like increasing the FHOR threshold to reflect the current median house sale price would ease the cost burden on first home buyers and importantly also help to free up rental stock when we have a rental shortage.
