Western Australia’s Real Estate Institute fears the state government will change or even scrap the stamp duty concession for first home buyers in the forthcoming budget.
Stamp duty is not levied in WA on the first $500,000 spent on a first home purchase.
REIWA president David Airey said there was a possibility first home buyers could lose that benefit in the May 8 budget as the state government moves to improve its debt-laden balance sheet.
The exemption has already been removed in other states including NSW and Victoria.
"If that happens, it is likely to see a very big slowdown by first home buyers who will simply not be able to purchase if they have to fund the full cost of stamp duty," Mr Airey.
"That benefit to them is worth $14,000.
"NSW saw overnight a big reduction in first home buyers."
Mr Airey said first home buyers were already struggling to raise the five-to-10 per cent deposit required for a mortgage and get off the "rental treadmill".
He said stamp duty was "such a big slug", it was turning people off home ownership.
But he's encouraged by the possibility of the WA government reviewing stamp duty.
A spokesman for Treasurer Mike Nahan said the state government had no immediate plans to replace stamp duty with a broad-based land tax, as proposed by REIWA.
"However, the government recognises that stamp duty on property transactions is one of the least efficient taxes in the country, and is keen to actively engage in the commonwealth government's white paper processes on national tax reform and reform of the federation," the spokesman said.
This included looking at options to reform state taxes and provide the states with more sustainable and efficient sources of revenue, he said.
After last year's state budget, the grant for newly-constructed homes in WA rose by $3000 to $10,000, but the grant for buyers of established homes fell by $4000 to $3000.