Originally set to expire on 30 June, South Australian Treasurer Tom Koutsantonis yesterday announced that South Australia government would use their upcoming state budget to extend and expand stamp duty concessions for buyers of off-the-plan apartments.
Under the new arrangements, a stamp duty concession of up to $15,500 will now be available until 30 June 2017 and will now apply to off-the-plan apartments across all of South Australia, rather than just the inner city areas of Adelaide.
According to Koutsantonis, nearly 600 buyers accessed the concession in the past 12 months and the expansion and extension of the program will benefit the state’s economy and housing supply.
“The stamp duty concession for off-the-plan apartments has been an extremely effective and targeted mechanism for stimulating growth and jobs in the economy,” he said.
“We want to maintain that stimulus to support the construction industry and expand it to renew housing stock and create jobs right across the state.”
While the government in South Australia believe the move is a positive, Angelo Mena, director of Adelaide based Alexa Real Estate, said a close eye needs to be kept on the scheme to ensure there isn’t an oversupply of apartments, especially in inner Adelaide.
“If you jump online and look at what’s around in Adelaide there are hundreds of apartments for sale at the moment,” Mena told Your Investment Property.
“There are hundreds of them in a small geographical location, so I think they need to be careful about how many they’re trying to get built. There’s always a possibility of oversupply happening,” he said.
Mena said the extended concession is likely to increase interest in the state’s off-the-plan-market, he said it might not come from local buyers.
“One thing you do need to remember is that Adelaide has never traditionally been a high-rise, high density sort of city. Unlike Sydney and Melbourne where it’s accepted that you have that sort of inner city living, our metropolitan area is a lot different,” he told Your Investment Property.
We haven’t really embraced that sort of inner city living. We’ll probably see a few more Chinese investors come here if we get a lot of new apartments, but I’m not sure just how interested your average South Australian will be.”
The announcement was welcomed by the Property Council of Australia (PCA), who believes it will boost affordability and is a step in the right direction for the future of stamp duty.
“Budget stimulus measures like extending stamp duty concessions for off-the-plan apartments are strongly welcomed by developers, investors and particularly first home buyers,” South Australian PCA executive director Daniel Gannon said.
“Any assistance for first home buyers is a housing affordability measure at a time when affordability is becoming out of reach,” Gannon said.
“While residential stamp duty abolition is the end game, this announcement is a positive step in the right direction for developers and buyers.”
