Developer Tim Gurner says the Victorian government’s stamp duty cuts are a strong start to get the property market moving again, but warned the effort is doomed to fail unless Melbourne’s reputation as a safe place to invest is restored after years of being pummelled by lockdowns, high taxes and debt.
“The strong consensus in other states is that Victoria is broke, it’s cold, and your property prices don’t go up,” Mr Gurner told The Australian Financial Review.
The long COVID-19 lockdowns under former premier Daniel Andrews had caused “incredible damage … to the brand of Melbourne” and the state government had been in disarray ever since, with a “massive debt problem” that gave property investors no reason for confidence.
“We have some real catching up to do. Melbourne is now the sixth-most-expensive city in the country, which is obviously ridiculous, we should be number two.
“Why would you invest in Melbourne when there’s been next to zero capital growth and the state has a massive debt problem? The stamp duty change is fantastic and at least gives investors a reason to consider the city again.”
Stamp duty relief
Mr Andrews’ successor, Premier Jacinta Allan, this week unveiled 12 months of stamp duty relief for all off-the-plan apartment purchases, including investors and foreign buyers, in a $55 million bid to try to stimulate development of new homes.
Mr Gurner praised the stamp duty changes as the “best decision” the state Labor government had made in years, but said more heavy lifting was needed to address the housing crisis by increasing investment in Victoria, the country’s most heavily taxed state.
Mr Gurner’s eponymous group of companies specialises in luxury apartments and has more than 20 development sites across the country, including in prime locations such as Sydney’s Kent Street overlooking Barangaroo and on Melbourne’s St Kilda Road. He was 154th on this year’s Rich List with a worth of $989 million.
Melbourne house prices have risen by about 10 per cent since 2020, he said, while Perth is up 70 per cent, Adelaide 65 per cent, Brisbane 64 per cent and Sydney by 27 per cent.
Other major developers cautiously welcomed the stamp duty relief. Mirvac chief executive Campbell Hanan said in an ASX release on Tuesday the plan would boost demand in apartment sales, while Salta Properties managing director Sam Tarascio told The Age it would not “stimulate the market to the level required to deliver the stock we need”.
It came amid a rash of Labor announcements on housing, including plans to increase high-rise developments in affluent Melbourne suburbs such as Toorak, Malvern, Armadale and Brighton. On Tuesday, the government announced a new charge on developers to help fund parks, schools and transport near new projects.
The housing announcements in Victoria look set to continue all week. A summary document leaked to Liberal MP James Newbury on Tuesday suggests Ms Allan will launch a plan that will allow owners to build a second dwelling on their block without a permit if certain requirements are met, something Merri-bek City Council in Melbourne’s inner north has already initiated.
Federal, state and local governments across the country are under increasing pressure to get more homes built, to ease prices and cost-of-living pressures such as higher rents and transport costs. Experts warn the joint state and federal government target of 1.2 million new homes by 2029 is in danger of falling far short.
Research by property advisory firm Charter Keck Cramer found that just 2100 new apartments were launched in Victoria in 2023-24, an 80 per cent drop on the 10-year average of 10,200. Mr Gurner said construction costs had risen by 40 per cent since 2020, while revenues are only up by 10 per cent.
“The simple answer to fixing viability is you get brand Melbourne back on the international stage, and you get revenues moving again,” he said.
“We need prices to move, and we need people wanting to live here again. We’ve got great population growth, but our market has been incredibly subdued compared to other states. All you need to do is walk down the streets in Melbourne and people feel flat, whereas in Sydney and Brisbane it’s positive, bustle and upbeat.
“I’m very confident we’re about to have the biggest boom of our lifetime in the next 10 years because we’ve got such an undersupply of housing, but people need confidence that Melbourne is actually a place you want to come to for business or university.”
The pilot infrastructure contribution program announced on Tuesday will be rolled out in January 2027 – after the 2026 state election – and will be limited to the suburbs of Broadmeadows, Camberwell, Chadstone, Epping, Frankston, Moorabbin, Niddrie, North Essendon, Preston and Ringwood.
Mr Gurner said any additional costs to developments would be passed on to consumers.
The keys to fixing the housing crisis in Victoria were fast-tracking development, getting back some of the skilled labour that had been “sucked” into major infrastructure projects such as the $100 billion Suburban Rail Loop, and reforming planning controls, he said.