John McGrath – Victoria offers the best incentives for home buyers

If there was ever any doubt about the resilience of Australian property, Melbourne provides a case study of strength in adversity. Although it’s not the shiniest star amongst the capital city recoveries, Melbourne’s comeback in 2021 has been nothing short of incredible.

New CoreLogic figures show the city’s median house price has gone up by 17.4% between January 1 and October 31 this year to $972,659. The median apartment price has risen 7.8% to $621,898.

Sure, this trails Sydney’s growth (27.8% houses and 14.5% apartments year to date), but it’s a stunning result for the most locked down city in the world during the pandemic.

Regional Victoria has done even better due to the impact of the regional relocation trend still underway on the East Coast. Heightened demand in regional cities and lifestyle areas has pushed the overall regional median house price up 19.6% year to date, with apartments up 19.8%.

As discussed in our McGrath Report 2022, the Victorian Government has made the property and construction industries two of the key pillars of its economic recovery plan. This has resulted in arguably the most attractive suite of home buying incentives in the country being offered today.

Let’s take a look at some of the government help available to Victorian home buyers:

1. The eligibility threshold for the existing off-the-plan stamp duty concession for owner occupiers has been temporarily increased from $550,000 (non-first home buyers) and $750,000 (first home buyers) to $1 million. The concession reduces the stamp duty payable by deducting the cost of construction incurred after the contract date from the purchase price to determine a reduced ‘dutiable value’ upon which stamp duty is charged. This means buyers of higher value apartments, such as downsizers, are eligible for the discount. It’s available until June 30, 2023

    

2. In the 14 suburbs within the City of Melbourne LGA, additional stamp duty concessions are available on new properties with a dutiable value of up to $1 million for all buyers, including investors. Until June 30 next year, buyers will pay no stamp duty on properties that have been on the market for a year or more since completion, and just 50% duty on newer listings. This is an extra inducement to purchase new apartments in the city and surrounding areas such as Docklands, Southbank, Carlton, Kensington and Parkville. Buyers can take advantage of both the off-the-plan concession discussed above as well as this concession to save big

    

3. For all home buyers, a principal place of residence (PPR) duty concession is available on new and established properties up to $550,000. Importantly, if you’re buying with a partner or friend, only one of you has to meet the eligibility criteria

    

4. First home buyers can get a full stamp duty exemption on new or established first home purchases up to 600,000, or a concession on homes up to $750,000. If you buy or build a new home under $750,000, you can also get the $10,000 First Home Owner Grant

    

5. Last month, the Victorian Government introduced a $500 million Victorian Homebuyer Fund, which is a shared equity scheme for first home buyers. To be eligible, you have to earn less than $125,000 as an individual or $200,000 as a couple, and have a 5% deposit. You can ask the government to contribute up to 25% of the purchase price in exchange for shared ownership of the property

    

6. If you are a pensioner buying a home, there is a stamp duty exemption on homes valued at $330,000 or less, and a concession on homes between $330,001 and $750,000

As Australian finally opens up, I expect Melbourne to rise again as one of the world’s most liveable cities. To read more about the Melbourne property market, download the McGrath Report 2022.