Edition #9 - VIC Announces Stamp Duty Savings With Mixed Responses, Clearance Rates Dip Again, More Relief For Renters & VIC Considered a FHB Haven

Victoria Announces Stamp Duty Savings for Off-the-Plan Buyers

Victorian homebuyers will save tens of thousands on stamp duty when purchasing off-the-plan apartments, townhouses, and units over the next 12 months. Premier Jacinta Allan introduced the initiative to stimulate property development, with the new policy applying to buyers at any price point, including investors.

The policy is designed to accelerate new developments by making off-the-plan purchases more affordable, allowing developers to secure financing and start construction sooner. Allan emphasized that the move will help bring more housing projects to market.

Under the new rules, stamp duty will be calculated based on land value before construction, resulting in significant savings. For instance, on a $620,000 off-the-plan apartment, buyers will pay just $4,000 in stamp duty, saving $28,000.

Treasurer Tim Pallas noted the initiative would cost the government $55 million but believes it will support developers during this challenging period. While ruling out major changes to stamp duty—due to its contribution to state revenue—Pallas expects the market to improve within the next year as material costs and interest rates stabilize.

The policy only applies to strata subdivision properties, while existing concessions for house and land packages will remain in place. There has been a mixed response to the policy introduction, with some industry praising it as a positive step toward increasing housing supply and affordability, while others are calling it ‘reckless’ and a ‘serious harm to some home buyers

Auction Clearance Rates Continue to Slide Across Combined Capitals

The combined capitals auction clearance rate dropped to 63.9% last week, the lowest preliminary clearance rate since December 2022. It fell from 64.5% in the prior week, which later revised to 60.6%.

The overall number of combined capitals auctions increased to 1,913 this week from 1,836 the week before. A number of Labour Day and King's Birthday long weekends throughout several states over recent weeks did however see fewer auctions held in some areas.

Sydney's clearance rate fared the worst of all cities, recording just a 62.7% success rate, down from 66.1% the week before. Sydney was also one of the few capital city markets to record a fall in the volume of auctions with just 524 homes going under the hammer.

In Melbourne, the clearance rate inched higher to 64.4% from 56.7% the prior week and was still the fourth lowest of the year. Auction volumes rose to 1,059 after a sharp dip the week before.

Of the smaller capitals, Brisbane hosted 152 auctions and returned a preliminary clearance rate of 61.0%. Adelaide's clearance rate was 70.6% from 129 auctions, while Canberra had a 51.6% success rate from 38 auctions. Perth hosted 10 auctions with a strong 85.7% success rate, and Tasmania hosted just one auction.

Light at the end of the tunnel for renters in Australia

Rent prices are still higher across Australia compared to a year ago, but growth is slowing down. According to PropTrack's latest Market Insight report, national median weekly rents rose by 1.7% in the September quarter to $610, up 7% from a year earlier, marking the weakest growth since 2021.

Even with record rents, growth is now softening due to increased rental stock and the ongoing affordability pressures from rising costs. Growth in capital city rents was 6.8% year-on-year to $640, while regional rents grew 8% to $540 per week.

Meanwhile, Sydney remains the most expensive city to rent, with the median weekly rent holding firm over the quarter at $730. Melbourne's rents, at $570 per week, are among the lowest of all capital cities, as some tenants transition into home ownership and decrease rental demand.

While Perth posted the most robust yearly growth at 12.1%, already there are some signs that market pressures start to take a breather, with fewer applicants attending each inspection and taking a little longer to secure a tenant for rentals. In total, although the rental market is still quite tough, experts expect balanced conditions in the future as supply continues to improve and demand softens further.

Victoria now presents itself as a haven for first home buyers across the country.

While prices and high mortgage rates make the present housing market challenging for first-home buyers throughout Australia, Victoria has stood out in recent months. First-home buyer numbers remain above the decade averages for Australia as a whole, and Victoria has led the way with 32% of all new first-home buyer loans.

Government support, in particular the First-home Guarantee Scheme that allows buyers into the market with a 5% deposit, has propped up first-home buyer activity in Victoria. First-home buyers have also had a bit of an easier run into Melbourne's market due to the slow price growth and larger housing stock compared to the other capitals. Other states, however, have more mixed challenges. For South Australia, for example,

declining affordability makes saving a deposit increasingly difficult, while in Western Australia, increased investor activity forces the first-home buyers from the market.

Interest rates are likely to fall in 2024; hence, first-home buyers could go up as borrowing capacity improves. However, state policies and market conditions may well prove to have huge influences on the trend.

Sam Giardina - Finance Broker - Clio Financial

PH: 0422 269 868

E: [email protected]

W: www.cliofinancial.com.au

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DISCLAIMER: This article is intended for informational purposes only and does not constitute financial advice. The content is based on current market data and research but may not be applicable to your personal circumstances. Before making any financial decisions or taking action, you should consult with a qualified financial advisor.