House hunters could look to border towns

First home buyers trying to find "the worst house on the best street" in prized locations could soon face even stiffer competition.

Popular suburbs in the north and south of NSW just became more attainable and attractive with the introduction of new land tax laws.

People buying first homes worth up to $1.5 million will soon be able to choose between paying an annual land tax or a lump sum in stamp duty.

NSW Premier Dominic Perrottet is confident the stamp duty reforms will help thousands of people trying to save for deposits.

But the opposition fears the land tax rate could be jacked up by future governments and warns it could eventually be extended to every property across the state.

Labor has promised to scrap the scheme if it wins the state election next year.

NSW first-home buyers purchasing properties under $650,000 can already avoid stamp duty, while those under $800,000 attract a lower rate.

The land-tax option extends to properties under $1.5 million.

The ACT has been steadily lowering stamp duty and increasing land tax for several years.

Australia Institute senior economist Matt Grudnoff said NSW had chosen a "more elegant solution" than the ACT.

"The NSW process is probably easier, particularly from a political standpoint," Mr Grudnoff told AAP.

He said while some of the efficiencies had been "overblown" the land tax scheme was still more efficient than stamp duty, and harder to avoid than income taxes.

Depending on the program's success in NSW, it could prompt Queensland and Victoria to consider their own changes.

There are roughly 130 homes under the $1.5m limit in Tweed Heads and surrounding suburbs on the NSW-Queensland border.

More than half were priced between $800,000 and $1.5m. The median price of a four-bedroom house in Tweed Heads scrapes under at $1.49m.

Local real estate agent Jason Abbott said the NSW scheme had potential.

"Of all the homes that get sold around here about 80 to 90 per cent would be under $1.5m," he told AAP.

Tax incentives and disincentives influence purchase decisions.

The Queensland government shelved plans to charge investors land tax based on the value of their property holdings across the country earlier this year after other states refused to hand over investor data.

Despite it being scrapped, Mr Abbott said the proposal prompted some prospective buyers to look south.

In Tweed Heads, there are detached houses and units available close to the beach, with price tags much lower than on the Gold Coast, which is a five-minute drive across the Queensland border.

On the NSW-Victorian border, the town of Albury has more than 220 properties listed under $1.5m.

However, only about 50 are priced above existing concessions.

South of the Murray River in Wodonga, nearly 150 listed homes would qualify for the NSW schemes, if they were on the other side of the border.

In Victoria, the Andrews government has no plans to replace stamp duty with land tax.

Opposition Leader Matthew Guy has offered up to 7000 first-home buyers stamp duty exemptions on purchases under $1 million.