Stamp duty changes to deliver fewer Melbourne apartments: Charter Keck Cramer
A leading property research firm has warned the proposed withdrawal of stamp duty concessions for investors buying new Melbourne apartments off the plan from July 1 could greatly reduce the supply of affordable inner-city housing.
Consultancy Charter Keck Cramer said this proposed initiative, among a raft of "positive" measures announced in March by the Victorian government to improve housing affordability, would have "significant unintended consequences".
"Impacts from these proposed changes are expected to become most pronounced in Melbourne's new apartment market relative to other housing types," said CKC's Robert Papaleo and James Mansour.
The supply of Melbourne apartments is already slowing and planned tax changes could make it worse, Charter Keck Cramer says. Graham Denholm
"This is because investors have always been more highly represented in this dwelling type. For example, 43 per cent of all flats and apartments in Melbourne are already owned by investors compared to only 11 per cent of detached dwelling stock owned by investors."
Earlier this month the consultancy published figures showing apartment commencements in Melbourne had already dropped in response to regulator-driven curbs on property investment.
According to CKC, the removal of off-the-plan concessions would add $23,000 to the cost of buying a $500,000 apartment off the plan (rising to $29,000 for a $600,000 apartment) and act as massive disincentive to investors.
This represents a "near 12 times increase from current charges for an off-the-plan purchase," Mr Papaleo and Mr Mansour said. Melbourne investors would go from having a $14,000 to $20,000 lower stamp duty charge than investors in Sydney or Brisbane, to a situation where they were to pay between $9000 and $11,000 more for an apartment of the same price, they said.
In consequence, the ability of developers to provide apartment projects "of meaningful scale" has been placed "at some risk" by these proposed changes, they said.
"The foundation of [the current stamp duty concession] policy's success was its ability to induce purchasers, especially investors given the compelling financial benefits, to unlock sites and underpin project delivery," the analysts said.
"The proposed policy change is expected to actually result in the perverse outcome of reducing the already slowing rate of new apartment completions post-2018.
"It can also be anticipated that second-round effects upon the market are likely to include a changed mix of apartments, with new apartment pricing likely to rise as projects become smaller and apartments invariably become larger to meet the changed market context compounded by recent introduction of apartment design guidelines."
CKC expects 5000 fewer apartments to be delivered across Melbourne in 2017, relative to expectations from 2016.
Introducing your Newsfeed
Follow the topics, people and companies that matter to you.
Find out moreRead More
Latest In Residential
Fetching latest articles