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.

Larry Schlesinger

Larry Schlesinger

Larry Schlesinger was a property writer at Property Observer

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