'Sorely needed': How slashing stamp duty is helping Victoria win the new homes race

In an effort to stimulate development, the Allan Government is slashing stamp duty on Victoria's off-the-plan apartments, units and townhouses to cut upfront costs, speed up building, and make it more affordable for all home buyers to purchase off the plan.

The one-year stimulus aims to support industry to deliver more homes for buyers and renters across the state, and is expected to cost the government $55 million over the period.

Taking immediate effect from Monday, 21 October, the temporary stamp duty concession is no longer capped to specific price points or first-home buyers – now, all buyers are stamp-duty exempt for eligible properties at any price point.

The move hopes to encourage more Australians to enter the property market, and remove a major barrier for developers trying to build new stock for Victoria's ambitious target of 80,000 new homes per year, during the next 10 years.

"We asked industry what they need to build more homes sooner – and this is what they said,” Victorian Premier Jacinta Allan said.

"It will get more of these projects away sooner. And what that means is it unlocks more homes for everyone."

Victorians will get a welcome opportunity to drastically lower their stamp duty over the next 12 months. Picture: Getty

More formally known as land transfer duty, stamp duty is essentially paying the government a fee for transferring a property’s title into your name. The one-off fee has long been viewed as a burden for purchasers and the construction industry alike, as well as a stumbling block for older Australians looking to downsize.

The cuts are just one part of the Allan Government's answer to address the housing crisis.

Allan has already announced that high-rise residential towers will be fast-tracked across 50 public transport hubs in suburban Melbourne, under a radical overhaul of the state's planning laws, with further announcements to be made throughout this week.

An impetus to downsize

REA Group head of economic research Cameron Kusher said there was more the government needed to do to address the deeper challenges that removing stamp duty alone would not necessarily solve. But he did see multiple positives with the scheme.

"It will definitely make people think about downsizing. We know one of the reasons people don't downsize is because there is that stamp duty cost, and if they don't have to pay that, it certainly makes it attractive," Mr Kusher said.

He said it would see larger established homes back onto the market for younger families looking to upsize, with older Australians hopefully snapping up any oversupply of three- and four-bedroom off-the-plan properties.

REA Group head of economic research Cameron Kusher says stamp duty costs prevent people from downsizing. Picture: supplied

'The beginning of our sector's recovery'

As for the industry, the aim is that it will help stimulate stagnation and drive further growth.

With a concession reducing upfront costs for more buyers, developers could look forward to more pre-sale success – which would help meet finance requirements faster and start the construction of new homes sooner.

"I think what is positive for the Melbourne apartment market is it will start helping some of these projects get some sales and clear some of that stock that's been sitting on the market, potentially encouraging developers to start kicking off new projects," said Mr Kusher.

Major Australian developer, Mirvac, welcomes the "decisive action" from the Allan Government, which it believes will encourage more Victorians into the housing market.

"Along with a continued focus on boosting supply and increasing the efficiency of the planning system, these initiatives are critical to helping support new home construction and bring confidence back to the market," said Mirvac general manager of residential development Victoria, Elysa Anderson.

Jellis Craig director of project sales Stephen Bowtell currently works across 25 development projects and has been swamped by the positive response from industry and purchasers alike.

Property seekers and owners have responded very positively so far to the news of the new concession. Picture: Getty

"I've been overwhelmed with contact today from developers, but also purchasers – one who told me that they weren’t ready to buy on Friday last week, and today asked to meet again to discuss next steps," Mr Bowtell said.

“This announcement has been sorely needed in the industry and has already generated immense positivity in the market. I believe this is the beginning of our sector's recovery. It's a genuine incentive that we feel will move the dial for purchasers – whether they're first-home buyers, young professionals or downsizers."

The break needed until interest rates fall

Victorian treasurer Tim Pallas said the scheme was designed to be a short-term intervention to help ease struggles until interest rates reduced, which he said would likely happen within the next six months. 

"At the moment, we know that the industry is in a difficult situation, and what they need is the ability to be able to put away these vitally important projects. We expect that over the next 12 months, the material circumstances of the industry will improve," Mr Pallas said.

The timing of the scheme was helpful, according to Mr Kusher, who noted the expectation of when interest rates were going to be cut has already been pushed out.

"Even a week ago, people were expecting interest rate cuts around February of next year for the first cut. The timing of that in terms of the futures markets is now being pushed out to April, and there's now only one more cut after that April cut expected next year," he said.

Mr Bowtell was interested to see the positive impact the initiative could have on the housing sector in the coming year, irrespective of cuts.

"The challenges in our industry are multi-faceted, so it's great to see the government taking a multi-pronged approach with initiatives in planning and stamp duty savings. We hope this is just the first of many announcements that will help unlock supply in the market and foster sustainable growth for the future."

Previous stamp duty concessions

Previously, first-home buyers and owner-occupiers could access a stamp-duty concession when they bought off the plan, allowing construction costs to be deducted from the sale price when calculating how much stamp duty they owed.

This was capped for first-home buyers and owner-occupiers.

To access the concession, the reduced value for stamp duty calculations, following the deduction of construction costs, had to be lower than thresholds of $750,000 for first-home buyers and $550,000 for owner-occupiers – otherwise the concession wasn’t available.

As of today until 21 October 2025, those limitations have been scrapped.

Anyone – including investors – can access the benefit, and there are no price caps.

Read a detailed breakdown of how Victoria’s temporary off-the-plan duty concession works here.

This article first appeared on realestate.com.au and has been republished with permission.