Victoria's property market is navigating challenging waters, marked by a housing supply crunch, soaring prices, and a rental crisis that has put immense pressure on the state's residents. Amid these challenges, the Victorian Government has introduced a significant overhaul of stamp duty for off-the-plan apartments, townhouses, and units. These reforms aim to reduce upfront costs for buyers, stimulate housing construction, and inject fresh momentum into a stagnating market.

But what exactly do these changes entail, and how might they reshape Victoria's housing landscape? While there are hurdles to overcome, these reforms offer a glimmer of hope for buyers and developers alike. Let’s unpack what this means for the market—and why optimism might be warranted.

Key Changes to Stamp Duty

Previously, stamp duty concessions for off-the-plan purchases were limited to specific buyer categories and property price thresholds. Here’s what has changed:

• Eligibility Expansion: Concessions now apply to all buyers, including investors.
• Generous Deductions: Buyers can deduct 100% of construction and renovation costs when calculating stamp duty.
• No Price Thresholds: The concessions apply regardless of property value.

These changes dramatically lower upfront costs, making off-the-plan purchases more accessible. For instance, a $620,000 off-the-plan apartment could see stamp duty reduced from $32,000 to just $4,000—a saving of $28,000.

What’s in It for Buyers?

The reforms are a lifeline for Victorians struggling with affordability.

Lower Barriers to Entry

By reducing upfront costs, more people can enter the market sooner. For first-home buyers and young families, this could be the push they need to secure their first property.

Appeal to Investors

Including investors in the concessions is a strategic move to boost rental supply. With rental vacancy rates at historic lows, encouraging investors to return to the market could alleviate the rental crisis.

Maximising Depreciation Benefits

New properties are particularly appealing to investors because of the tax benefits they offer. The stamp duty savings make off-the-plan purchases even more attractive, potentially revitalising interest in this segment.

Challenges for Developers

While buyer demand is likely to increase, developers still face significant obstacles:

• Rising Construction Costs: Labour and material prices remain high, squeezing profit margins.
• Labour Shortages: The construction sector continues to grapple with workforce shortages, leading to delays.
• Financing Hurdles: Higher costs and risk-averse lending conditions make it harder for developers to secure funding.

These challenges have contributed to the rising price premium of new apartments over established ones, which has reached 44% in inner Melbourne.

Opportunities for the Market

Despite these challenges, the reforms present several opportunities:

1. Reinvigorating Investor Interest
   Stamp duty savings could entice investors back into the market, boosting demand for off-the-plan properties and addressing rental supply shortages.
2. Stimulating Construction Activity
   With reduced costs for buyers, developers may find it easier to secure pre-sales and obtain project financing. This could unlock stalled developments, particularly in high-demand urban areas.
3. Promoting Urban Density
   The focus on off-the-plan properties aligns with urban planning goals, encouraging higher-density living in well-connected areas. This supports sustainable growth and better land use.

The Bigger Picture

While the stamp duty overhaul is a positive step, broader reforms are necessary to tackle Victoria’s housing challenges.



Planning and Approval Processes

Streamlining zoning and planning regulations could accelerate the delivery of new housing. Faster approvals would enable developers to respond more quickly to market demand.

Addressing Cost Pressures

Coordinated efforts between government and industry are needed to reduce construction costs. Incentives for local manufacturing and workforce training could alleviate material and labour shortages.

Balancing Supply and Demand

The government must strike a delicate balance between stimulating new construction and maintaining affordability in the existing market. This includes investing in infrastructure to support new developments.

A Positive Outlook

Despite the hurdles, there are reasons to be optimistic about Victoria’s housing market:

• Market Accessibility: Lower upfront costs make homeownership and property investment achievable for more Victorians.
• Boost to Rental Supply: Encouraging investor activity could help ease rental pressures, benefiting tenants across the state.
• Economic Stimulus: Increased construction activity could create jobs and drive economic growth, providing a broader boost to Victoria’s economy.

The Bottom Line

Victoria’s stamp duty overhaul is a step in the right direction, offering buyers and investors significant savings and revitalising interest in off-the-plan properties. While challenges remain, these changes could pave the way for a more accessible and balanced housing market.

By working together—buyers, developers, and policymakers—Victoria can address its housing challenges and create a more sustainable future for all. And with the right guidance, you can turn these changes into opportunities to achieve your property goals.