How this week's Victorian budget might affect your prospects of buying a house
This year's Victorian budget made waves in the property sector, with a lot of the angst coming from those concerned about measures designed to raise billions of dollars worth of revenue for the state government over the coming years.
Amid the flurry of the week's coverage, you might have missed the finer details of changes, which may be important to you if you're planning to buy a house anytime soon.
Here's some of what will (and won't) be changing come July 1 and beyond.
How much stamp duty will I have to pay?
There's a bit of movement here, particularly for those looking to buy a place right in the middle of Melbourne.
At the moment there's a waiver for the stamp (or land transfer) duty for residential properties up to $1 million introduced last year as part of coronavirus relief measures, but it's due to wind up.
On new residential properties the concession sits at 50 per cent, and for existing residential properties or vacant residential land it's 25 per cent. The measures, which came into effect on November 25 last year, haven't been extended and are due to finish up on June 30.
This year's budget includes special stamp duty concession measures targeting central Melbourne, with new residential properties in the city up to $1 million being sold eligible for discounts ranging from 50 per cent to a full 100 per cent. Those measures are due to run until the end of the next financial year.
The budget includes the extension of a concession available to people buying homes off the plan, with the initiative extended until the end of June 2023 and its cap increasing from $750,000 up to $1 million.
What if I'm buying my first home?
Since mid-2017, there have been targeted stamp duty concessions available to first home buyers, with those purchasing homes under $600,000 fully exempt from paying stamp duty, and those purchasing homes up to $750,000 able to claim a partial concession.
Those measures are due to continue.
The First Home Owner Grant also remains in place for those building new homes in Victoria, with one crucial change.
At the moment, those in metro areas are eligible to receive $10,000 and those in regional areas are eligible for a $20,000 boost.
Those grants will still be available from July 1, but the regional grant has been slashed in half and will only be $10,000.
How will tthe high-level land tax and stamp duty increases affect me?
The measures that have dominated the headlines, framed by Treasurer Tim Pallas as getting developers and property investors to pay their "fair share", have attracted a lot of attention — including strong criticism from the industry.
Those measures include a premium stamp duty on property transactions above $2 million coming into effect from July 1, increasing the stamp duty payable to $110,000 plus 6.5 per cent of the dutiable value in excess of $2 million.
A new windfall gains tax will apply to properties where the value is boosted through rezoning by more than $100,000, with a 50 per cent tax on windfalls above $500,000. This will come into effect from July 2022.
Different land tax increases will apply for holdings worth $1.8 million or $3 million, and come into effect from the 2022 calendar year. Keep in mind that land taxes generally don't apply if your property is your primary residence.
Deakin University property and real estate researcher, Adrian Lee, said it was unclear what effect the measures targeting the "wealthy end of the property space" would have.
He said research showed there may be a localised impact, but most of the changes probably wouldn't affect the average person.
"If it's for developments and they're getting hit with a higher tax then it is likely that they will pass that increase to buyers," he said.
"Either they'll pass it on or they won't develop. The tax may just decrease the margins to the extent that they won't bother developing more homes."
Will these changes cool the market down?
In April the median house price in Melbourne hit $1 million for the first time, and the median price in regional Victoria surpassed $500,000, and there's no sign that things are slowing down.
Dr Lee said the trend of rising house prices, as well as people shifting out of cities, was a global phenomenon rather than something confined to Victoria or Australia.
He said working from home, low interest rates and the lack of travel and migration had led to a renewed interest in purchasing property had all contributed to rising prices.
"Other countries, including Canada, Hong Kong and New Zealand, they have also had increasing house prices."
"We're experiencing a global phenomenon."
Whether or not the phenomenon will continue is "the biggest question" about future trends in property at the moment, according to Dr Lee.
He said the fact people were investing in homes in response to working from home arrangements, rather than renting, indicated that it would be a permanent shift.
"This is what people desire or think will happen in the future, so it may be the reality given that people are really willing to put their money at stake," he said.
Originally posted by "abc news" on the 22nd May 2021 - https://www.abc.net.au/news/2021-05-21/victorian-budget-prospect-buying-a-house/100155174