Stamp Duties (Off-the-plan Apartments) Amendment Bill

Committee Stage

In committee.

Clause 1.

The Hon. J.A. DARLEY: The purpose of this bill is to extend the current stamp duty exemption that is provided when an apartment in the CBD or outskirts is purchased off the plan. I understand the rationale behind this is partly to increase the population in and around the city as well as stimulating the building industry and encouraging developers to Adelaide. Whilst I do not oppose this bill, I will put on the record that I believe it would be more useful if the government were to consider the benefit of extending a stamp duty exemption for all new houses and land packages regardless of their location in South Australia, provided they have the same value qualifications as the current subject departments.

The building industry is one of the largest employers in the state, and each new house provides a multiplier effect of 14 times in the economy. In a recent news article in The Advertiser it was reported that the resale return on apartments, especially those in high-rise complexes, was much higher than the resale return on houses. To demonstrate this, I provided details of an apartment which sold off the plan in 1997 for $1.198 million and completed in 2000. The same apartment recently sold for $4 million, a return of 233 per cent over 15 years. However, as the subject apartment was on the waterfront it is expected that the resale value would be higher than normal due to the limited availability of waterfront property. In my opinion this example is misleading as the capital gain achieved is not typical of the market.

In comparison, apartments in the CBD and surrounds are readily available. Some would even say that there is a surplus of properties to demand which will result in a much lower resale return—if there is a profitable return at all. In the past five years there have been 193 apartments which have sold and then resold in Adelaide and North Adelaide. Of these, 68 apartments (or 35.23 per cent) were sold for less than what the owner purchased them for. Using 3 per cent of the sale price to account for conveyancing and sales costs, an additional eight apartment owners suffered a loss from their resale; just over 60 per cent made a profit.

The figures show that growth in apartment sales is not as robust as some may expect and, therefore, may not be as attractive to buyers. For the record, I am simply making the point that all that glitters is not gold, and expanding the stamp duty exemption to other properties would go further to stimulate the building industry and attract investors.

Clause passed.

Clauses 2 to 5 and title passed.

Third Reading

The Hon. G.E. GAGO (Minister for Employment, Higher Education and Skills, Minister for Science and Information Economy, Minister for the Status of Women, Minister for Business Services and Consumers) (16:57): I move:

That this bill be now read a third time.

Bill read a third time and passed.