New Stamp Duty Concessions: A Boost for Buyers or a Bailout for Builders?

The Victorian government's latest housing initiative, a stamp duty concession for new apartments, units, and townhouses bought off-the-plan, is being celebrated as a step towards making property ownership more accessible. Premier Jacinta Allan announced that buyers would benefit from a significant reduction in stamp duty costs by deducting construction costs from the sale price. While this move has been positioned as a strategy to help buyers get onto the property ladder, there are deeper concerns that this is more of a short-term fix aimed at propping up the construction industry.

At first glance, removing the cap on concessions and extending it to properties of any value may seem like a win for buyers. However, it’s essential to look beyond the surface. The concessions, which only apply to off-the-plan developments, effectively funnel buyers towards a particular segment of the market—new builds. This raises the question: Is this truly designed to assist buyers or merely an attempt to shore up the struggling construction industry?

A quick search on realestate.com.au shows over 2,200 established apartments currently for sale under $700,000 in Docklands alone. Where is the undersupply in this segment of the market? With such an abundance of stock already available, it's hard to justify claims that these incentives are needed to unlock more homes for buyers. Instead, it seems the government is trying to artificially stimulate demand for new builds, conveniently addressing the needs of developers who are facing challenges rather than addressing the broader affordability crisis.

Premier Allan admitted that builders had approached the government seeking help, citing tough conditions exacerbated by successive interest rate rises. It’s no surprise, then, that this policy seems more like a lifeline for developers than genuine relief for homebuyers. While increasing the supply of apartments and townhouses is important, these types of incentives often serve to bolster developer profits under the guise of housing affordability.

Treasurer Tim Pallas claimed the move wouldn’t drive up prices, yet history suggests that government incentives aimed at stimulating one segment of the market often do. By concentrating demand on off-the-plan purchases, there’s potential to inflate prices within that narrow segment. As the government seeks to provide a boost to developers, buyers are left navigating a landscape where their choices are effectively limited. It's the classic smoke and mirrors approach—announcing buyer-friendly concessions while primarily benefiting an industry in need of support.

Ultimately, these concessions seem to focus more on keeping the construction wheels turning than genuinely addressing the challenges homebuyers face. Instead of tackling the broader affordability crisis, this policy risks being another temporary measure that papers over deeper issues in the property market. For prospective buyers, this announcement should be met with cautious optimism—and a healthy dose of skepticism.