Tax concessions shot of confidence for industry and homebuyers

NEWLY unveiled tax concessions for apartments, units and townhouses will provide confidence for the property sector and boost the supply of new homes in Victoria.

Industry bodies welcomed the initiative but said more still needed to be done to tackle the housing crisis.

The Property Council described it as a significant advocacy win as it congratulated the Victorian Government for adopting the industry’s proposal for deeper off-the-plan stamp duty concessions.

While the concessions may only be operational for the next 12 months, Property Council Victorian Executive Director Cath Evans said the announcement will translate directly to the feasibility of new housing projects.

“Apartment and unit developers have been hit hard in recent years by a combination of factors,” Ms Evans said.

 “Current analysis of the build-to-sell apartment market by Charter Keck Cramer shows apartment commencements in Melbourne have declined to less than 4000 a year.

“Off-the-plan concessions for all purchasers will help bring back new buyers to this important part of the housing market.

“Increasing off-the-plan purchases has been proven to support the feasibility of new housing projects, which in turn unlocks further development. With Victoria’s ambitious housing supply targets in mind, this is a big step in the right direction.

“We welcome the application of these concessions to the townhouse market too, which operates across all parts of the state.”

Ms Evans said it was vital for the performance of the concessions to be closely monitored during the next 12 months, with a view to an extension.

“We have long advocated for positive changes in taxation policy to stimulate the construction of new homes. If this policy directly translates to housing supply, we strongly believe it should continue beyond this initial 12-month period,” Ms Evans said.

“We will continue to advocate strongly over coming months for further positive changes.”

Housing Indusrty Association Executive Director, Victoria, Keith Ryan welcomed the 12-month pause in stamp duty but said more needs to be done. 

“Stamp duty is an inefficient and ineffective tax that drives up the cost of housing, and a reduction in this burden is a step in the right direction to boost housing supply,” added Mr Ryan.

“The industry continues to face a number of significant challenges in boosting housing supply.

“This includes the costs and time associated with delivering the key ‘last mile’ enabling infrastructure to get projects shovel ready faster, the continuing raft of cascading regulatory changes, outdated home building contract laws and increasing costs and decreasing availability of insurance.

“Today’s announcement of planning and tax reform is an important step forward to increase housing supply, though further targeted reforms are needed to ensure builders can deliver these much-needed homes for Victorians.”