Revealed: The hidden cost crushing first-home buyer dreams

The Federal Government’s 5 per cent Deposit Scheme was sold as a game-changer for first-home buyers.

But behind the fanfare lies the real affordability killer – stamp duty.

This “hidden tax” is blowing budgets, draining savings, and keeping thousands locked out of the market.

In Sydney, a first-home buyer saving the required $75,000 deposit could see their upfront costs blow out to nearly $140,000 once stamp duty is included.

In Melbourne, a $47,500 deposit almost doubles to around $100,000, while buyers in Brisbane and Adelaide face an extra $30,000–$40,000 unless they build a new property.

“Everyone is cheering for the 5 per cent deposit scheme – and yes, it’s a positive step,” said Ami Reynolds, Director of Broker That.

“But when you look at the actual numbers, stamp duty is the hidden cost blowing budgets and keeping people locked out of the market.”

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The 5 per cent deposit scheme was meant to help, but a “hidden tax” is quietly blowing budgets and keeping first-home buyers out of the market.

The cost of stamp duty has escalated dramatically over the past decade.

A first-home buyer who once paid $15,000 to $20,000 in duty is now staring at bills double or triple that amount, while wages have not kept pace with property prices.

“Stamp duty has gone from being an extra consideration to a genuine deal-breaker,” Ms Reynolds said.

“It’s one thing to save a 5 per cent deposit, but when the government asks buyers to then add another $30,000 to $60,000 just to pay tax, that’s a structural affordability issue.”

Experts also warn that “bracket creep” is compounding the problem.

Even in NSW, where stamp duty thresholds have been indexed since 2019, the savings amount to just $6,000 to $8,000 on a million-dollar property – a small dent when buyers are facing bills of up to $60,000.

Kiana Solakovski and Kristian Radosavljevic recently bought an apartment in Carlton after a long search. Picture: Richard Dobson

While some states offer concessions – such as South Australia and Queensland providing full relief for new builds, and NSW and Victoria offering exemptions at lower price points – these benefits vanish once property prices climb above $750,000 to $800,000.

“First-home buyers don’t dream of off-the-plan apartments or house-and-land packages on the fringe – they want established homes in communities they know,” Ms Reynolds said.

“Stamp duty on these properties is a silent barrier that no government scheme has properly addressed.”

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