How stamp duty cut can boost rental homes in Geelong
Renters can expect to see the benefit of a one-year stamp duty concession for off-the-plan property purchases as new figures show rent rises might have peaked in Geelong.
A one-year stamp duty concession for off-the-plan strata home purchases is set to provide a future boost for the region’s rental market as new figures show rent rises might have peaked.
The uncapped stamp duty concession opened the door to investors to buy apartments and townhouses before they are built and bank the stamp duty savings.
Leading off-the-plan marketer Nick Cuni said the change had an instant reaction.
“Every single project is promoting it. Leads have increased already by 30 or 40 per cent and people that were interested over the past three months, have started to re-inquire again,” Mr Cuni said.
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“The biggest downfall for the market at the moment is there hasn’t been any new projects that have been finished that are suitable for investors.
“Therefore, there’s ‘60 people’ lining up to get a rental. And landlords can push prices up because there’s competition.
“It’s going to flatten or stabilise rentals, but you get more opportunities for people to find homes to live in.”
Mr Cuni said developers holding permits were considering whether to bring plans forward.
“They’re going to pull the trigger a lot earlier now,” Mr Cuni said.
“There’s three major projects in Geelong that have permits and so forth. They’ve all contacted me saying, what should we do?
“If you’ve got big projects – like a couple of them are – just be careful that when you’re going to release at the same time.”
Gurner and Monno are among the developers that hold permits to major projects in central Geelong.
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Hayeswinckle head of property management Jessica Scholer said off-the-plan dwellings were ideal for investors because they delivered lower compliance costs to maintain minimum standards, a key reason why landlords have been selling up older ex-rental homes this year.
“When you have a brand new property that meets all the legislative requirements that we need, you’re not going to have any issues with compliance,” Ms Scholer said.
“This will help investors that want to buy and build. They can literally lease it out, have a tenant in place, and know that it’s covered under warranty as well.”
Ms Scholer said more investors had returned to the market since July, looking at modern properties or due diligence on what compliance costs they’re up for if they bought an older property.
New PropTrack data for suburbs show median asking rents were rising in the September quarter in more than half the suburbs in the Geelong region.
But the number of suburbs where rents were stable, or had fallen has increased on previous quarters.
“Hopefully we have seen the peak in the market,” Ms Scholer said.
“It will be interesting to see how it goes over the next six months, because we’ve noticed a lot of investors have been selling off their properties, which in turn, means that we start to see a shortage of rentals, which is when the prices go up.
“However we’re also finding our renters are staying a lot longer, so we’re seeing less movement to find something else.”
The biggest rent rises were for units in Corio, Ocean Grove and Hamlyn Heights or houses in Point Lonsdale, Whittington and Bell Park. The largest falls were for units in Norlane, Manifold Heights and Geelong West, or houses in Barwon Heads, Hamlyn Heights and Highton.
Ms Scholer said most popular properties were priced between $450 and $550 a week.
“I don’t see rents going up too much more dramatically than where it’s at now,” Ms Scholer said.
“I think it will stabilise, which is really good for renters as well, because obviously some of the prices are really quite high for renting, and it’s difficult for a lot of people.”
PropTrack senior economist Eleanor Creagh said building more homes was the “only sustainable solution over the long term” for rental shortages, and that investors were likely to have an appetite for suburbs where rents were rising consistently.
Ms Creagh said that high density housing had traditionally been sold well to investors, and had not been the “first choice or popular option” for homebuyers.
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Originally published as How stamp duty cut can boost rental homes in Geelong