End of NSW stamp duty concessions will create a short-term sales vacuum: Meriton

Harry Triguboff’s Meriton Group has warned that the end of full stamp duty concessions on Saturday for off-the-plan purchases will create a sales vacuum

The Meriton Group, the biggest builder of new apartments in Sydney, has also expressed a lesser concern that first-home buyers will be put off buying off-the-plan apartments until the first-home owners grant doubles to $15,000 (for new home purchases only) on October 1.

James Sialepis, national director of sales at Meriton, says first-home buyers make up only a small percentage of its off-the-plan sales.

Instead, he is more concerned about the elimination of the full stamp duty concessions for investors, which he says “will have a far greater impact on development activity”.

From July 1 investors and non-first home buyers will receive a $5,000 handout from the NSW government for off-the-plan purchase priced under $650,000 as opposed to up to $22,490 under the previous full stamp duty concession for off-the-plan purchases valued up to $600,000.

“It will take time for investors to adjust to paying full stamp duty again, which could have ramifications for those developers, unlike Meriton, who require pre-sales in order to finance construction,” says Sialepis.

But, he says, being dependant on first-home buyers to secure pre-sales would seem naive, especially considering the financial hurdles placed on them by the banks.

CBRE managing director David Milton expects a return to a more “normal” sales environment.

David Milton says about 30% of the record 360 sales in Sydney projects being marketed by CBRE over June were for apartments priced above $600,000 - meaning buyers were not eligible for stamp duty concessions.

He says a major shortage of property in Sydney is driving sales and adds that there has been too much of a focus on first-home buyers, which accounted for around 10% of off-the-plan CBRE sales in June.

He expects more normality to return to the market now, saying before the focus was on “what you can get for under $600,000”.

“Buyers will now be more objective about their purchasing decisions more focused on buying what they want. There are a lot of owner-occupier buying two-bed apartments.

“There’s an enormous shortage of stock in Sydney that is driving the market.

“People are buying off the plan because they like apartment living,” Milton says.