✅This is a welcome change for industry, noting the reinstated concession has been in place since October 2024 and has, to-date, made little to no difference to off the plan purchases and commencements.
Putting it really simply: a few % saved in stamp duty doesn’t make up for the high cost of purchasing new, high-density development for most buyers.
To be more effective, tax concessions should first be used to incentivise the sale of completed but, as yet, unsold apartments and units. After all, according to Charter Keck Cramer, some 8,000 completed units remain unsold around Melbourne at prices substantially lower than replacement, yet these have not sold due to subdued demand.
We actually need a “First Sale” Stamp Duty Concession, not just for off–the–plan.
Of course, the Victorian Government will likely not do this as they are more concerned with approval and commencement figures than getting existing dwellings sold. They do not appreciate that solving the existing stock problem will lead to more of the new.
🤔Selling through current stock is the best thing that can be done to create the runway to get a more future units built at new prevailing price points. Until that happens, the proposition for buying off–the–plan remains broken.
🚅🚉There is also another irony in all this. One of the biggest justifications used by government for slowing down greenfield releases is that it costs government more to deliver (which is wrong, but I’ll leave that for now). But government is instead choosing to forgo revenue to get a bit more density working, negating the supposed infrastructure cost advantage by spending it as subsidy. 🤷🏻
🤔It‘s voodoo #economics, and that‘s before you get into the whole cost to consumer argument.
The Age Kieran Rooney UDIA Victoria Department of Treasury and Finance, Victoria
P.S. Can someone at the Victorian Planning Authority explain to me why preparing a PSP now costs $6 million? 💸