Slashed stamp duty for new builds boosts SA housing supply but prices keep climbing

South Australian first-home buyers have saved $73.5 million on stamp duty for new homes in the past financial year, state government figures show, however home-price growth has surged ahead regardless, with the state recording the steepest increases in the country.

The Malinauskas Government abolished stamp duty for first-home buyers who bought or built a new home a little more than a year ago in its 2024-25 state budget.

It also removed the $650,000 threshold on its First Home Owner Grant, extending the $15,000 incentive to roughly 1280 more people than in the previous financial year.

The median price of a new home bought under the scheme was $766,000, with the average buyer receiving $36,000 in stamp duty relief.

South Australian treasurer Stephen Mullighan said the stamp duty savings, along with the $15,000 grant, amounted to a total of $120 million for first-home buyers in the past year.

“The average first homebuyer purchasing a new home was $51,000 better off,” Mr Mulligan said.

Price-growth outstrips savings

However, when the exponential home-price growth in both Adelaide and South Australia is taken into account, the savings were not quite as substantial.

Adelaide’s median home price increased by 9.4% to $845,000 in the year to July – the strongest growth of any capital city in the country, PropTrack data shows.

Regional SA recorded the strongest growth of any Aussie market, with prices there increasing by 12.5% to $459,000 in the year to July.                                 

“Looking purely at those stamp duty savings themselves definitely doesn’t paint the full picture, because we know that these sorts of schemes can put upward pressure on home prices,” PropTrack senior economist Anne Flaherty said.

“There’s a strong possibility that people are paying more for a home compared to what they would be doing in the absence of this scheme.”

If the typical home bought under the scheme followed the same trajectory as Adelaide’s median price and increased by 9.4% in a year, that is an increase of approximately $72,000. 

“What a first-homebuyer saves in these up front costs, they can also put towards the cost of the property itself, so that is the way in which it can push the prices up,” Ms Flaherty said.

“The flipside of that though of course is that it gives first homebuyers a bit of a leg-up relative to other buyers they are competing with – subsequent homebuyers or investors.”

Building boost a positive

Mr Mullighan said the reform was designed to boost supply rather than fuel demand in an already competitive market.

“Abolishing stamp duty for first home buyers on new builds is boosting the number of young South Australians getting into their own home and seeing more houses being built,” he said.

The government claims the policy is already having an impact on supply, with Australian Bureau of Statistics data showing the number of dwellings under construction in South Australia is 6% higher than a year ago, and dwelling commencements up 33% year-on-year.

“We are tackling the housing crisis by growing supply, not fuelling demand for existing homes,” SA housing minister Nick Champion said.

Ms Flaherty said though first-home buyer incentives did tend to push property prices higher, aiming them specifically at building new homes was largely positive.

“Obviously we need to be ensuring that enough homes are being built to accommodate population growth. There has been a shortfall in Adelaide which is one of the reasons why the state has seen such strong price growth,” she said.

“Now Adelaide is actually transitioning into a market where future housing supply looks like it’s going to be on track with population growth, so that’s a real positive for the state.”

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