Industry welcomes apartment scheme change

Source: Business News

The state government has expanded the stamp duty rebate to apartments under construction, in a bid to bolster supply.

Industry has welcomed the state government’s expansion of the stamp duty rebate plan to include apartments under construction, with experts hoping it will boost housing supply.

Treasurer Rita Saffioti announced the move today, speaking at Blackburne’s East Village project in Karrinyup, which is due for completion later this year.

The scheme provides a 75 per cent stamp duty rebate for apartments valued up to $650,000, between 37.5 per cent and 75 per cent for apartments between $650,000 and $750,000, and a 37.5 per cent rebate for properties valued more than $750,000.

Previously, it applied to apartments off-the-plan, which developers said was a disincentive to commence builds.

Ms Saffioti told media that the change was in response to direct feedback the government heard from industry.

“We want to make sure that apartment developments aren’t being held up,” she said.

“Extending the concession to include apartments under construction will remove another constraint preventing projects getting underway.”

Ms Saffioti would not be drawn on whether government would implement the change when Business News asked about it in August.

At the timeFinbar Group managing director Darren Pateman said expanding the policy to apartments under construction would incentivise development.

“If that extended to under construction, that would make the difference, because that would actually motivate developers to turn the soil and get started,” he said in August.

Mr Pateman welcomed the move, saying it would benefit buyers for the $680 million of Finbar projects under construction in South Perth, Applecross and Rivervale.

“Previously commencing on-site works would result in less sales volume due to the loss of off-the-plan incentive to buyers,” he said.

“This morning’s announcement goes some way to resolve this and would encourage project commencements that may have been intentionally delayed otherwise.  In turn, helping much needed housing supply.”

Blackburne managing director Paul Blackburne said the move would be welcome news to buyers, but concessions should increase for higher value dwellings.

“The current government has taken many steps in the right direction towards fixing up the planning system to improve housing supply and housing choice for West Australians,” he said.

“The reduction in stamp duty which is mostly for smaller new apartments off the plan is one more small step in the right direction towards fixing up the many crisis level issues around urban sprawl and lack of housing supply.”

He added that for most baby boomers, there would still be a large stamp duty payable, due to the high cost of dwellings in affluent areas.

“For larger apartments in prime areas near the coast which is where most baby boomers want to rightsize to there is still far too much stamp duty which is a major inhibitor to hard-working middle-class people wanting to rightsize,” he said.

Edge Visionary Living managing director Gavin Hawkins said the scheme’s expansion would free up larger homes as baby boomers transitioned into apartments.

Sensible representations were made by both industries bodies, the UDIA and Property Council, to extend the stamp duty rebate to the construction phase of off-the-plan developments,” he said.

“The action by the state government in introducing these measures will undoubtedly result in much needed supply to the Perth market.

“It will have the impact of making it much easier for the downsizer market, to transition from the large family home to apartment living, freeing up much needed supply to a significantly constrained market.”

Recent data from Urbis shows that just two apartment projects started construction this year, compared with 13 in 2022.

Property Council of Australia WA Division executive director Sandra Brewer said anything to bolster supply would help solve the state’s housing shortages.

“Extending the concession to projects under construction means the development industry can kick-start apartment projects,” she said.

“This initiative will enable more West Australians to get into the homes they urgently need.”

Ms Brewer added that the measure would help reduce entry costs for apartment buyers, as well as boost WA’s housing diversity and affordability.

“Demand for apartment living is on the rise throughout Western Australia, yet historically, apartment buyers have faced higher stamp duty costs than those opting for house and land packages,” she said.

“This announcement is good news for apartment projects waiting in the wings to commence construction. This change is expected to spur on purchasers and get projects underway.”

Urban Development Institute of Australia WA executive director policy and strategy Sarah Macaulay described the policy move as a “desperately needed boost for the stagnating apartment sector”.

“UDIA WA has consistently highlighted that the apartment market in Perth has essentially ground to a halt, with just two new projects commencing construction in the first half of 2023,” she said.

“The lack of apartment projects getting off the ground in WA is occurring right when we are in dire need of more housing across the board in WA.”

Housing Industry Association of WA executive director Michael McGowan also supported the change, in light of rapid increases in build costs in recent years.

“Increases in construction costs over the last three years have significantly affected the viability of many apartment projects,” he said.

“Extending transfer duty concessions will encourage consumers to consider apartment living without the excessive duty of up to $50,000 to move.”