Housing boom comes to Florida
Treasurer Tim Pallas called the new policy a short-term measure and ruled out extensive changes to stamp duty.

The Victorian Government is cutting stamp duty on off-the-plan apartments, units, and townhouses to lower upfront costs, speed up construction, and ensure the properties are affordable.

The one-year plan, which came into effect from Monday, was aimed at helping the housing industry build more homes for both buyers and renters across the state, Premier Jacinta Allan stated.

By reducing the upfront costs through the stamp duty concession, the government hopes to make it easier for people to buy off-the-plan, helping to kickstart more developments and keep the housing market moving.

The new change is a response to feedback from the industry, which has been affected by high interest rates that are putting strain on buyers and slowing down sales of new properties.

Premier Allan explained that the idea came from discussions with industry leaders, who highlighted that rising interest rates were not only slowing sales but were also preventing new developments.

By making it easier for people to buy off-the-plan, Allan believes developers will be able to get the funding they need faster and begin building new homes sooner.

The new concession is expected to make homes more affordable and help developers find more pre-sales success. Besides, it would allow projects to start sooner, increasing the supply of homes and supporting both the construction industry and rental market.

While speaking to reporters, Allan said: "It will mean more buyers into the market and it will get those projects [under way] sooner. Whether you want to live in an apartment, a unit or a townhouse – it provides more opportunities for more Victorians to be able to find a home where they want to live."

Under the new policy, anyone buying an apartment, unit, or townhouse off-the-plan can claim the stamp duty concession, including non-first-time homebuyers and those planning to occupy the property. Since there will be no value limits, the concession will apply to properties under any price.

The concession starting will let buyers get a full 100% discount on the construction and refurbishment costs that are still outstanding when calculating how much stamp duty they need to pay. It will also help reduce the amount of stamp duty owed and make it easier to buy off-the-plan properties.

Normally, when someone buys an apartment off-the-plan, they would have to pay about 25% of the total stamp duty. However, with this new concession in Victoria, a person buying an off-the-plan apartment before construction begins could save a significant amount on stamp duty.

For example, if the apartment costs AU$620,000, the stamp duty could be reduced by around AU$28,000. That would mean the buyer would only need to pay around AU$4,000, instead of paying about AU$32,000 in stamp duty. This reduction makes it much more affordable for people to buy off-the-plan.

Treasurer Tim Pallas called the new policy a short-term measure to support the sector during its challenging period, and ruled out extensive changes to stamp duty, as it accounted for a third of the state's taxation revenue, The Guardian reported.

"Stamp duty raises about AU$8bn dollars a year, and the state would not be able to deliver its services without a revenue base of that magnitude," Pallas said.

The new policy is expected to cost the government an estimate of AU$55 million over the next 12 months, he added.

According to a parliamentary inquiry last year, stamp duty was termed "inefficient, unpredictable and inequitable," but that it would be difficult to remove it completely. The inquiry urged for a national reform of stamp duty to "better address its negative impact on housing affordability, economic mobility and market efficiency, for more Australians."

Meanwhile, on Sunday, the premier announced changes to planning rules in 50 inner-Melbourne areas to allow for more housing. This move would give the government more control over some of Melbourne's wealthiest suburbs to build thousands of new homes.

She said young people were currently "locked out" of these areas due to low availability of homes and soaring property prices, even though they were close to jobs and transport.