Master Builders Australia is calling for stamp duty to be lowered for all first home buyers, so they can more easily afford to enter the market.

In a submission to a Senate inquiry into Intergenerational Housing Inequity, Master Builders chief economist Shane Garrett says high stamp duty bills often led home buyers to take out larger mortgages to cover the cost of the tax.

"Stamp duty drains the financial resources of those transitioning from renting to home ownership,'' he says.

"Stamp duty bills erode the home purchase deposits of homebuyers, forcing them to take on mortgages that are both larger and heavier.”

According to Master Builders the amount of stamp duty can vary substantially from state.

It says first-time buyers in Sydney are required to pay about $39,700 in stamp duty while a similar transaction in Melbourne attracts a $57,500 stamp duty bill.

The ACT Government abolished stamp duty for all first home buyers in its FY2027 Budget.

"Both renting and buying a home should be made more affordable so that a smaller portion of family income gets absorbed by housing costs," Garrett says.