In its submission to the inquiry, the association's chief economist Shane Garrett said large 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,'' the submission reads.
"Stamp duty bills erode the home purchase deposits of homebuyers, forcing them to take on mortgages that are both larger and heavier.
"First home 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 group has also called for stamp duty surcharges for foreign buyers to be abolished for new houses.
It comes after the ACT became the first state or territory to abolish stamp duty for all first home buyers in its budget last week.
Master Builders expressed concern housing remained expensive across the board.
"Both renting and buying a home should be made more affordable so that a smaller portion of family income gets absorbed by housing costs," Mr Garrett said.
"This ultimately relies on delivering more new homes to both the owner-occupier and rental market."
Housing group National Shelter, which will also appear before the Greens-led inquiry on Monday, said expectations on how much house prices should rise in the long term should be laid out.
"Clear guidance on long-run house price growth expectations would help unwind the historic price ratchet and support a gradual return to sustainable house price-to-income ratios," the peak body said in its submission.
The group called for Commonwealth rent assistance to be increased and indexed so those in the rental market received more support.
Its recommendations included establishing nationally consistent principles for renters in the next five years.
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