In an attempt to increase the number of city residents, the South Australian government has abolished the stamp duty on off-the-plan apartments in central Adelaide.
Purchasers will save over $21,000 and first-home buyers over $31,000 in this State Budget initiative to attract buyers and investors to the central city area.
The concessions apply in the Adelaide City Council area, including North Adelaide, and are expected to stimulate property investment and encourage more home buyers to switch to apartment living.
The initiative follows a submission by the Property Council, which welcomed the budget announcement, but said it should be extended in the future to include other inner city metropolitan areas once they have been rezoned.
Premier Jay Weatherill said the cuts were designed to create a more vibrant city and encourage higher-density inner-city living. They will include a full stamp duty concession for two years, followed by a partial concession for two years after that. It will cost the state approximately $5.1 million.
Off-the-plan apartments valued at up to $500,000 will receive a full stamp duty concession of up to $21,330 between 2012 and 2014, followed by a partial concession of up to $15,000 from 2014 to 2016. Properties valued at more than $500,000 will also receive a capped concession.
This is great news for those looking for value in investment property and also for first home buyers, who would receive the First Home Buyers Grant on top of that.
While you might think decreasing taxes would also decrease government revenue, the opposite is actually the case. The government in Western Australia cut property transfer duties by 0.9 per cent between 2003 and 2006 and, because this stimulated the property market, government revenue actually increased by over $700 million during that period.
Stimulating the property market will also give the building and construction industry a boost and create more local jobs.
SA Treasurer Jack Snelling said property transactions in South Australia had fallen to their lowest levels in 25 years, and the stamp duty cuts are one measure the government is introducing to try to kick-start the property market.
Detractors of the move include Adelaide City Councillor Sandy Wilkinson, who warned against rushing into large scale construction of poorly designed apartments, which could sully the inner-city living experience.
The SA Opposition also objected to the fact that other areas such as Norwood, Unley and West Beach were not included in the stamp duty cuts.
The initiative is part of a general trend by many state governments around Australia to try to revitalise their city centres by encouraging a mix of commercial and residential occupancy.
Perth is undergoing a similar transformation, with the current construction of a multi-use inner city riverside complex known as Perth Waterfront, which will contain over 1,700 apartments, nearly 40,000 square metres of shops, restaurants and entertainment venues and 150,000 square metres of office space.
Similar CBD developments in Sydney include V By Crown, featuring a hotel, office and retail space and over 420 high-end apartments and Central Park, with around 2,000 residential apartments surrounding a large central park.