“Changing leadership is an opportunity for changing policy.”
And change is what is required if Victoria’s challenged property sector is to get back out of the ground according to Hamton’s executive chairman Paul Hameister.
Hameister said he believed the resignation of former Victorian premier Dan Andrews and the appointment of his successor Jacinta Allan was an opportunity to shift gears on development.
Hameister was speaking at The Urban Developer’s Melbourne Long Lunch during a panel with fellow developers—Salta Properties chief operating officer Emma Woodhouse and Time and Place co-founder Tim Price.
Hameister said the Victorian housing reform, Andrews’ last reform before he left, would affect projects, their feasibility and timelines.
“I think without a change to the transfer duty system, we are going to have a lot of permits and no change on the ground,” Hameister said.
“The biggest policy change the Victorian government can make is to create an incentive for people, including foreigners, to buy off the plan.
“At the moment, there is none and in fact, there is a disincentive for foreigners to do so.”
Homebuyers currently pay 5.5 per cent in stamp duties for properties up to $2 million in value and then 6.5 per cent for properties over $2 million to buy off the plans. Foreign buyers pay an extra 8 per cent, and off-the-plan purchases had all but dried up as a result, Hameister said.
“As a build-to-sell developer, the only way you can put the pre-sales together to draw on construction funding is to sell off the plan,” Hameister said.
“Historically, we have been able to deliver above supply because we have been able to give an incentive to purchasers to buy off the plan.
“And unless it’s fixed, it doesn’t matter how many permits you put in place, there is no big change on the ground.”
Price agreed and also pointed out that it had been a policy request for the state government for a long time.
“A stamp duty exemption for off the plan would be nice and a big change,” Price said.
“It’s probably been the same conversation that we were having seven, eight, nine, ten years ago.
“And they are not missing out on revenue by not providing it, because (right now) people are not buying.”
Woodhouse agreed that some of the policy and legislation made it more difficult to get projects off the ground.
“We are the most highly taxed state in Australia so that really doesn’t help,” Woodhouse said.
“Even coming out with the vacant residential land tax bomb that was announced at the Property Council breakfast event ... it just makes people nervous that things are still changing.
“We are still in a period of instability and we really need things to settle.
“I think once we get that stability going, I think they will get some good momentum.”
However, Price said, the fast track option recently announced would help with planning delays.
“I have hope with the fast track the department has put out there,” Price said.
“That you can get something through that planning channel and actually be able to have the department to administrate the endorsement of that development application ... everyone has a story about the loss of an application to councils, and having to go to VCAT can be a bit problematic.
“My concern with it however is where are the resources coming from—they are going to be flooded [with applications].”
Price also suggested the state government could ease some of the pressure in the market by slowing down its infrastructure works program.
“I think for the next round of policy initiatives it would probably not be a good idea to run another train line between Box Hill and Doncaster,” Price said.
“I don’t think that’s helping some of our infrastructure contractors to price our formwork and our projects in a way that they probably could or should.”
“Everything we have heard in the market is that it is stabilising and we will stabilise moving forward,” Hameister said.
“This year, materials will be stable but the risk is with labour.
“I think there will be a kick in labour so an increase of at least 5 per cent.”
Woodhouse agreed that construction costs continued to affect projects.
“Getting enough labour is still an issue,” Woodhouse said.
“We have still got lots of big government projects under construction that are really pushing up prices and taking labour and all of the different subcontractors.”
“So that’s an ongoing challenge.”
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