How Queensland’s Stamp Duty Exemption Impacts Homeownership

Queensland’s stamp duty exemption offers first-home buyers a financial advantage by reducing upfront costs. This incentive can make homeownership more accessible, but it also has longer-term consequences that buyers should consider.​

Does it help build equity faster? Could it contribute to rising property prices? And how might changes to government policy impact home values and mortgage repayments in the future?​

In this article, Unconditional Finance breaks down how Queensland’s stamp duty exemption impacts mortgage repayments, property values, market trends, and long-term homeownership.

Immediate Benefits vs. Long-Term Considerations

As of 1 May 2025, first-home buyers in Queensland who enter into a contract to purchase a new home to live in (or vacant land on which to build a home to live in) will be able to apply for a full transfer duty concession, effectively reducing the duty to nil.

Immediate Benefits

For first-home buyers, avoiding stamp duty can make homeownership more accessible, easing the financial burden at the start of their journey. Key advantages include:

Lower upfront costs

Buyers may save thousands in stamp duty, reducing the amount they need to purchase a home. This means less financial strain at settlement, allowing buyers to focus on moving and furnishing their property.​

Improved borrowing power

Without the need to allocate funds for stamp duty, buyers may qualify for a larger home loan or access more favourable mortgage terms. This could potentially lead to a more competitive interest rate.

Faster homeownership entry

The reduced financial burden may allow buyers to buy a property market sooner, avoiding prolonged periods of renting or waiting to save a larger deposit. This may be beneficial if property prices are increasing.

Long-Term Considerations

While the upfront savings are appealing, buyers should also think about the long-term implications of the exemption. Factors to consider include:

Higher loan amounts

While buyers save on stamp duty, they may take on larger mortgages to afford homes within the exemption threshold. This can increase overall loan costs due to interest payments over the life of the mortgage.​

Property price inflation

As more buyers take advantage of the exemption, demand for affordable housing may drive up property prices, making it harder for future first-home buyers to enter the market.​

Limited eligibility

Buyers who exceed the exemption threshold by even a small margin may need to pay full stamp duty, which could increase upfront costs. This might lead some buyers to consider more affordable properties or delay their purchase.

While the stamp duty exemption provides a financial boost, buyers should carefully consider its impact on their long-term financial stability and homeownership goals.

How the Exemption Could Affect Mortgage Repayments

By avoiding stamp duty fees, first-home buyers may borrow more or retain extra savings. However, this decision can impact their loan repayment strategy.​

Potential Positive Impacts on Mortgage Repayments

Taking advantage of the stamp duty exemption may help first-home buyers better manage their finances in the early years of homeownership. Benefits may include:

Reduced financial pressure upfront

Without the need to pay stamp duty, buyers can allocate more funds toward mortgage repayments, reducing stress in the first few years of homeownership when budgets are often tight.​

Increased deposit power

Buyers can use their saved funds to increase their deposit, which may lower their loan-to-value ratio (LVR) and potentially reduce lender’s mortgage insurance (LMI) costs. A lower LVR could also help them access better interest rates.

Easier access to home loans

Buyers with higher savings and a lower LVR may be viewed as less risky borrowers, increasing their chances of securing loan approval from major banks and lenders.​

Potential Challenges

While the exemption helps buyers save on upfront costs, it may also lead to financial risks if they take on more debt than they can comfortably repay. Challenges to be aware of include:

Higher borrowing leads to higher repayments

Some buyers may choose to borrow the maximum amount available, which could lead to higher monthly mortgage repayments and may strain their finances in the long run.

Interest costs over time

Even a slightly larger mortgage could result in significantly higher interest payments over a 20- to 30-year loan term.​

Long-term affordability risks

If property values decline in the future, buyers who borrowed heavily could face negative equity, meaning they owe more on their mortgage than their home is worth.​

While the exemption reduces upfront costs, buyers should assess their borrowing limits to ensure they can comfortably manage repayments in different economic conditions.

Property Value Growth: Short-Term Boost vs. Long-Term Stability

Government incentives like stamp duty exemptions can temporarily boost demand, potentially influencing property prices. But does this lead to sustainable value growth, or could it create long-term affordability challenges for future buyers?

Short-Term Effects on Property Prices

The immediate impact of the exemption is often seen in increased competition and price movements within the entry-level market. Influences may include:

Increased demand for affordable properties

The exemption may encourage more first-home buyers to enter the market, increasing competition for homes under $500,000. This could lead to faster property sales and more competitive offers on well-priced homes.

Potential for price inflation

Sellers who are aware of the exemption may adjust prices, knowing buyers have additional borrowing capacity. This could contribute to higher property values, particularly in the lower price brackets where demand is strongest.

Sellers benefiting from exemptions

Homeowners with properties within the exemption cap may receive more competitive offers, as buyers prioritise properties that qualify for stamp duty savings. This can lead to higher selling prices, benefiting those looking to exit the market.

Long-Term Market Stability

While short-term demand may drive prices up, the long-term stability of property values depends on whether this growth is sustainable or temporary. Here are some key factors to consider:

Sustainability of demand

If the stamp duty exemption is removed or modified, demand for entry-level homes could decline, potentially slowing price growth or leading to price corrections in the future.

Resale challenges

Future buyers may not receive the same stamp duty savings, making properties that previously benefited from incentives less attractive. This could impact resale prices and extend selling periods.

Market shifts

The exemption primarily supports first-home buyers, but long-term property values depend on broader market conditions, including interest rates, supply constraints, and investor activity. Changes in these factors could influence demand and pricing trends beyond government incentives.

While property price growth can help homeowners build equity, buyers should be mindful that incentive-driven increases may not be sustainable over time. Understanding market trends and long-term affordability factors is essential when making a strategic property investment.

The Investor Perspective: How Future Buyers Might Be Affected

Although the stamp duty exemption primarily benefits first-home buyers, it also has ripple effects on investors and future buyers, influencing market trends and property values. Changes in buyer demand and affordability can reshape investment strategies and affect resale potential.

How Investors May Respond

As first-home buyers compete for entry-level properties, investors may need to adjust their strategies to maintain profitability.

Higher competition in entry-level markets

Investors targeting affordable housing may struggle to compete with first-home buyers who benefit from the stamp duty exemption. As a result:

• Some investors may be priced out of the lower-end market.
• This could push them toward higher-priced properties or different property types (e.g., townhouses, apartments).
• Investors may have to reassess rental yields, especially in areas where first-home buyers are dominating the market.

Rental market impacts

As more people transition from renting to homeownership, demand for rental properties could decline in some areas. This could:

• Lead to lower rental yields, especially in suburbs where the exemption fuels high homeownership rates.
• Impact property investors who rely on steady rental income to cover mortgage repayments.
• Make rental properties less profitable, potentially shifting investor focus to higher-yield areas.

Shift in investment focus

To avoid competing with first-home buyers, investors may look at alternative property segments:

• Properties above $550,000, where demand from first-home buyers is lower.
• Commercial real estate or regional markets, where investor competition is less impacted by government incentives.
• Developing rental properties in high-demand areas, rather than focusing on traditional investment suburbs.

Future Buyers Entering the Market

The long-term impact of the exemption extends beyond first-home buyers. Future property buyers—including second-home buyers, upsizers, and investors—may face new affordability challenges as market conditions shift.

No exemption for second-home buyers

Unlike first-home buyers, those upgrading or purchasing a second property must pay full stamp duty, which could:

• Make upgrading homes less affordable, slowing movement in the property market.
• Discourage current homeowners from selling, reducing overall property supply.
• Lead to higher demand for government incentives in the future.

Potential for resale challenges

Future buyers may not have access to the same stamp duty savings, which could influence the appeal of properties that previously benefited from the exemption. This could:

• Affect the resale value of entry-level homes, particularly if demand drops.
• Make it harder for first-home buyers to sell and move up the property ladder.
• Impact long-term property price growth in suburbs that experienced sharp price increases due to the exemption.

While the exemption provides short-term affordability, it may also reshape investment demand and resale trends, influencing how the property market functions in the coming years.

Future Risks: What Happens If Government Incentives Change?

Queensland’s housing policies may evolve, and changes to stamp duty exemptions could impact homebuyers, investors, and property values. While these incentives make homeownership more accessible today, there’s no certainty they will remain unchanged in the future. Adjustments to the exemption could influence buyer affordability, demand, and market stability. Here are some possible policy changes and their potential effects:

Raising the exemption threshold

If the exemption cap increases, more properties could qualify for stamp duty savings, leading to:

• Higher competition for homes in the $500,000–$600,000 range.
• Potential price increases in this price bracket due to rising demand.
• A shift in buyer focus toward slightly more expensive properties.

Lowering or removing the exemption

If the government reduces or eliminates the exemption, first-home buyers may face higher upfront costs, which could:

• Slow down property market activity, particularly for entry-level homes.
• Reduce buyer demand, affecting property prices in lower price brackets.
• Make renting a more attractive option, increasing rental demand and potentially benefiting investors.

New affordability measures

To address housing affordability, the government may introduce alternative incentives, such as:

• First-home buyer grants, providing direct financial support.
• Tax offsets or reduced LMI costs, making homeownership more affordable in other ways.
• Low-deposit home loan schemes, giving buyers access to property with smaller deposits.

Since government incentives can change, buyers should focus on long-term affordability, ensuring they can manage homeownership beyond temporary benefits.

Final Thoughts: Is This a Win for Homebuyers in the Long Run?

Queensland’s stamp duty exemption can provide significant financial relief for first-home buyers, but its long-term impact depends on various factors:

• Mortgage repayment strategies – Buyers should ensure they don’t overextend their borrowing capacity just because they’re saving on stamp duty.
• Property value trends – Market conditions can shift over time, affecting resale value and equity-building potential.
• Government policy changes – Future modifications to housing incentives could reshape affordability and impact long-term property demand.

While the exemption may make homeownership more accessible, buyers should consider the long-term implications and focus on financial planning to support future stability.

If you’re unsure where to start, getting advice from a mortgage broker can help you explore your options with confidence.