Victoria has introduced sweeping changes to stamp duty for off-the-plan apartments, units, and townhouses, effective October, PropTrack reported in its latest weekly economist update.
The initiative removes buyer restrictions and value thresholds, offering concessions to all, including investors.
Buyers now pay stamp duty based only on the land value if construction hasn’t begun. For instance, purchasing a $620,000 off-the-plan apartment before construction starts could save $28,000 in stamp duty.
PropTrack senior economist Eleanor Creagh (pictured above) highlighted the importance of the move.
“Stamp duty concessions reduce the upfront costs for buyers, and these changes may mean some buyers are able to purchase sooner than they otherwise would have, of particular importance with housing affordability at its lowest level in three decades," Creagh said.
The policy aims to tackle the chronic shortage of housing in Victoria, particularly in high-density developments.
“Encouraging the purchase of off-the-plan units should also help support urban density objectives, making efficient use of land and infrastructure,” Creagh said.
However, despite these efforts, developers face obstacles. Higher labour and materials costs, as well as financing challenges, continue to hinder the feasibility of new projects.
Many developments have stalled due to slim profit margins, slowing progress toward Victoria's ambitious housing targets.
In inner Melbourne, the price premium for new apartments over established ones has surged to 44%, creating a $250,000 gap.
“While the concessions significantly minimise stamp duties and help to minimise the cost premium buying new currently entails, it is not by enough to return this premium to more normal levels,” Creagh said.
Including investors in the concession scheme aims to boost rental supply, which remains critically low.
While the changes offer meaningful incentives, Creagh warned, “There are many barriers hindering homebuilding that require continued work from the approval and planning phase, right through to completion.”
With time-limited concessions, the policy could accelerate new projects, but addressing structural challenges remains vital, PropTrack reported.
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