Victoria Stamp Duty Saving
The Victorian government officially launched a 12-month stamp duty reduction policy on October 21 2024, aimed at stimulating the real estate market and alleviating housing supply pressures. Under the new policy, anyone purchasing off-the-plan apartments, units, or townhouses, whether first-home buyers or owner-occupiers all can benefit from significant stamp duty discounts, with no price cap. This means not only will buyers’ costs be substantially reduced, but more people will qualify for this benefit, helping to revive the off-the-plan market.
Policy Details: Stamp Duty Discounts for Off-the-Plan Properties in Victoria
Under this new policy, buyers can deduct 100% of unpaid construction costs when calculating the stamp duty payable. For example, if a buyer purchases a $620,000 off-the-plan apartment that hasn’t yet commenced construction, they would only need to pay about $4,000 in stamp duty, saving $28,000 compared to the original $32,000. For properties under construction, stamp duty will be fully charged on the completed portion, while the unfinished portion will still benefit from discounts.
The policy specifies that eligible properties must be part of an off-the-plan project with communal areas, such as shared driveways or hallways, while standalone homes are not eligible. However, first-home buyers and owner-occupiers can still take advantage of existing benefits that apply to standalone houses.
Context: Rising Interest Rates and a Sluggish Property Market
This stamp duty reform has been long anticipated. In recent years, the real estate industry has been urging the government to take action, particularly as rising interest rates have increased the cost of buying a home, slowing down property sales. Many development projects have been put on hold as developers require more time to accumulate pre-sales to secure enough funding for construction. The Victorian government’s new stamp duty relief is a response to these longstanding industry demands, aiming to reduce the upfront costs for buyers and incentivize more people to enter the market, accelerating project development.
Victorian Premier Jacinta Allan stated that the policy changes were introduced to help the construction industry speed up the building of new homes. She emphasized that building more apartments and townhouses would provide young people and families with more affordable housing options, thereby easing the current housing supply crunch.
Business Council of Australia's Call to Abolish Stamp Duty In addition to the Victorian government's reforms, the Business Council of Australia (BCA) has called on the federal government to completely abolish stamp duty in favor of land taxes. The BCA argues that stamp duty is a "terrible upfront cost" that not only hampers people from buying homes of suitable sizes for their families but also hinders the normal flow of the housing market. The BCA's report stressed that major policy reforms are essential if Australia is to build the 1.2 million homes needed over the next five years to address the country's housing crisis.
Victorian Government’s Further Plans: High-Rise Apartment Projects near Transport Hubs
In addition to the stamp duty cuts, the Victorian government has announced plans to fast-track approvals for high-rise apartment developments in around 50 public transport hub areas. These zones, primarily located near tram and train stations, are being targeted to increase housing supply through a streamlined approval process. Prestigious neighborhoods in Melbourne, such as Brighton and Toorak, are included in the list of areas for development. However, this plan has sparked some opposition, with residents concerned about losing their say in local developments and the impact on the traditional character of their communities.
The government has responded by stating that they will continue to engage with local communities to ensure that these new developments are tailored to the unique characteristics of each suburb, avoiding a one-size-fits-all approach.
Looking Ahead: A Key Step Toward Easing Housing Pressures
This stamp duty reform is seen as a crucial step in relieving the pressure on Victoria’s property market. By reducing the cost of buying a home, the government hopes to boost sales of off-the-plan projects and meet the growing demand for housing. Over the next 12 months, the success of this reform will depend on how buyers respond to the new policy and how the market reacts to these adjustments.
With this positive momentum, the Victorian government may continue to roll out more measures to stimulate the housing market, aiming to further reduce the burden on both buyers and developers while working to address Victoria’s long-standing housing supply issues.
