In a bid to boost the number of city residents in Adelaide, the State Government has announced a plan to ease stamp duty at a cost of $5.6 million.
Stamp duty will be either lowered or removed for apartments, but the concessions will only apply to dwellings in the Adelaide CBD and North Adelaide.
In a two-year trial, stamp duty will be abolished for people who buy an apartment off the plan for under $500,000. Properties valued over $500,000 will get a capped concession. After two years it will be trimmed back.
Speaking to ABC News in Adelaide, South Australian Premier Jay Weatherill said: “This is going to be a real impetus for investment in our CBD in apartment dwelling”.
The Property Council of South Australia’s Nathan Pine welcomes the stamp duty cuts but says they could go further.
“I think that perhaps in the future we should look at the inner metropolitan area once the rezonings in those places are done,” he said.
Adelaide City Councillor Sandy Wilkinson is urging the government not to rush the process: “The whole notion of city living in apartments could be sullied by an oversupply of poorly-designed apartments”.
In another budget leak, the first home bonus grant for new homes in the State will be extended for the next 12 months.
While concessions and grants are a welcome stimulus for the housing market, RateCity spokesperson Michelle Hutchison has warned borrowers against rushing into the property market too early just to take advantage of incentives.
“There may be a place for government grants and concessions, but borrowers shouldn’t let changes to rules motivate their decision to enter the property market unless they are in a good financial position. Instead, borrowers should aim to save at least 10 percent deposit, if not more,” she said.
“The lure of a government concession or grant means very little over the 25 year life of a loan; saving longer for a deposit can far outweigh the perceived benefits.”
The announcement comes just weeks after the Real Estate Institute of NSW proposed a “pay-as-you-go” stamp duty plan in a bid to kick-start the state’s property market.
Under the proposed plan, buyers would pay off their tax bill over three years. The Institute says the government would be “protected”, with stamp duty guaranteed against the property in the same way as unpaid land tax.