---
title: "Victoria Just Made Off-the-Plan Stamp Duty Free. It's a Trap."
description: "Victoria waived stamp duty on all off-the-plan apartments and townhouses. Sounds generous — until you realise 300,000 new units are flooding the market. The maths behind the government's real agenda."
author: Yan Zhu
date: 2026-02-26
category: Finance & Tax
url: https://premiumrea.com.au/blog/off-the-plan-stamp-duty-trap-victoria
tags: ["stamp duty", "off the plan", "Victoria", "apartments", "townhouse", "property tax", "Melbourne"]
---

# Victoria Just Made Off-the-Plan Stamp Duty Free. It's a Trap.

*By Yan Zhu, Co-Founder & Chief Data Officer at PremiumRea — 2026-02-26*

> When a government starts giving things away for free, your first question should be: what are they trying to sell? Victoria's off-the-plan stamp duty exemption is not generosity. It is inventory clearance.

I have a rule. When a government starts handing out tax breaks on a specific asset class, I don't celebrate. I ask why.

In mid-2024, the Victorian government announced that all off-the-plan purchases — apartments, townhouses, units — would be exempt from stamp duty. Every buyer. No income cap. No residency requirement. PR holders, citizens, temporary visa holders, even overseas purchasers.

My first thought was not "what a bargain." My first thought was: "They're trying to move inventory that nobody wants to buy."

And if you spend fifteen minutes looking at the planning pipeline for Melbourne, you'll reach the same conclusion I did.

## The 300,000-unit supply tsunami nobody is talking about

Before you get excited about saving $35,000 in stamp duty on a $650,000 apartment, consider what the Victorian government has been doing on the supply side.

They've drawn up development plans for over 50 activity centres across metropolitan Melbourne. Box Hill. Glen Waverley. Footscray. Sunshine. Ringwood. Each of these centres has been earmarked for high-density residential development — we are talking towers, mid-rise apartments, and townhouse complexes. The target? Roughly 300,000 new dwellings over the coming decade, the vast majority of which will be apartments and medium-density units.

Now think about that number for a moment. Three hundred thousand new units entering a market that currently has approximately 1.8 million dwellings total in Greater Melbourne. That is a 16% increase in housing stock — concentrated almost entirely in one asset class.

Supply and demand is not a complex concept. When you flood a market with a specific product type, prices for that product type stagnate or decline. That is not my opinion. It is a mathematical certainty.

So why would you exempt that exact product type from stamp duty? Because you need buyers. Because developers are sitting on unsold stock. Because the construction industry employs hundreds of thousands of Victorians and the government cannot afford to let it collapse.

> "Any time a government creates a targeted tax incentive for a specific asset class, you need to ask: who is the real beneficiary? In this case, it is developers with unsold inventory, not the individual buyer who thinks they just got a deal." — Yan Zhu, Co-Founder & Chief Data Officer, PremiumRea

## The maths your REA sales agent will never show you

Let me walk you through a scenario that plays out every single week in our office.

A prospective client calls us, excited. They have found a brand-new two-bedroom apartment in Box Hill for $650,000. Stamp duty exemption saves them approximately $35,000. The brochure says rental yield of 4.2%. They think they have found a winner.

Here is what the brochure does not say.

Of that $650,000 purchase price, roughly $450,000 is construction cost. The land component — shared among perhaps 80 apartments in the building — might be $200,000 per unit. Maybe less. That means the land-to-total-price ratio is around 30%.

Our investment philosophy at PremiumRea requires a minimum 80% land-to-price ratio. We only buy assets where the land is the dominant component, because buildings depreciate while land appreciates. The apartment buyer is paying a 70% premium for something that loses value every single year.

Five years from now, that $650,000 apartment will be competing against thousands of newer apartments in the same precinct. The building will be five years older. The appliances will be dated. The body corporate will have started discussing a special levy for external cladding remediation — a problem that has cost Victorian apartment owners billions in the past five years alone. Meanwhile, the stamp duty saving has been eaten alive by capital stagnation.

Contrast this with a $700,000 house on 600 square metres in Melbourne's southeast. Stamp duty costs roughly $38,500. But the land component is $560,000 or more. After a light renovation costing $10,000-$15,000, we consistently achieve rental yields of 5-6% and bank valuations that exceed the purchase price within six months. The house appreciates because the land appreciates, and there is no body corporate sending you letters about a $40,000 special levy.

The $35,000 you "saved" on stamp duty for the apartment? You will lose that — and far more — in capital depreciation within three to four years.

## Mark Twain was right, and the government knows it

"Buy land. They're not making it any more." Mark Twain said that over a century ago, and it remains the single most important principle in property investment.

The Victorian government understands this principle perfectly well. That is precisely why they have not extended stamp duty exemptions to established houses on large blocks. They do not need to incentivise purchases of an asset class that already has robust demand and limited supply.

The exemption exists for off-the-plan units because those units do not sell themselves. Developers need help. The construction industry needs throughput. And the easiest way to create demand for an oversupplied product is to make it cheaper at the point of sale.

But cheaper at the point of sale does not mean cheaper over the lifecycle of the investment. An apartment that costs you $35,000 less in stamp duty but fails to appreciate over ten years — or worse, depreciates — is not a bargain. It is a wealth destruction vehicle with a ribbon on top.

I have seen this movie before. In 2017-2018, Melbourne's inner-city apartment market experienced exactly this pattern. Stamp duty concessions on new builds drew in first-home buyers and overseas investors. Within three years, many of those apartments were selling for less than their original purchase price. The stamp duty savings evaporated. The only winners were the developers who cleared their stock.

## What happens when the music stops

Here is the scenario that keeps me up at night — for apartment owners, not for our clients.

Those 300,000 planned units will take a decade to build. But the stamp duty exemption creates a sugar rush of demand right now. Buyers flood into off-the-plan purchases in 2025 and 2026. Settlements occur in 2027 and 2028.

By 2028, the first wave of these new buildings is completed. Owners who bought off-the-plan discover their valuations have not kept pace with the purchase price. Refinancing becomes difficult. Some owners, particularly investors who bought with thin margins, need to sell.

Selling pressure increases. Prices soften. The next wave of completions in 2029-2030 hits a market that already has surplus apartment stock. Rents stabilise or decline as tenants have more choice. Yields compress. The negative feedback loop accelerates.

Meanwhile, house prices in established suburbs — where land supply is genuinely constrained — continue to climb. The wealth gap between house owners and apartment owners widens further.

This is not speculation. This is the mathematical consequence of a supply-demand imbalance that is being actively engineered by government policy. The stamp duty exemption is the spoonful of sugar that makes the oversupply go down.

> "In property, the difference between consumption and investment is straightforward: consumption feels good at the point of purchase; investment feels good a decade later. Off-the-plan apartments with stamp duty savings are consumption disguised as investment." — Yan Zhu, PremiumRea

## The PremiumRea alternative: what $650,000 actually buys you

For the same budget that apartment buyer is spending — roughly $650,000 including costs — here is what our clients typically acquire.

A three-bedroom house on 550-650 square metres in Melbourne's far southeast. Suburbs such as Cranbourne, Hampton Park, or Narre Warren. Purchase price around $650,000-$700,000. Land value representing 80%+ of the total.

After a cosmetic renovation of $10,000-$15,000, the property rents for $500-$550 per week as a standard tenancy. If we add a granny flat — construction cost approximately $110,000 plus GST for a 30-square-metre studio — total rental income jumps to $850-$900 per week across both dwellings. At a total investment of around $780,000, that is a gross yield of approximately 5.7%.

Six months after settlement, we arrange a desktop valuation. The bank typically values the improved property at $800,000-$850,000. Our client refinances, pulls out $40,000-$60,000 in equity — tax-free — and uses it as the deposit for their next property.

The apartment buyer in Box Hill, meanwhile, is watching their body corporate fees climb and their property value flatline. Both started with roughly the same capital. But the house buyer now has two income-producing assets with combined land holdings exceeding 1,000 square metres. The apartment buyer has one depreciating unit in a building full of identical depreciating units.

That is the difference between chasing a stamp duty concession and executing a genuine wealth-building strategy.

## Frequently asked questions

**Is the off-the-plan stamp duty exemption available to investors?**
Yes. Unlike many first-home-buyer concessions, this exemption applies to all buyers regardless of purpose — investor, owner-occupier, first-timer or otherwise. That broad applicability is itself a red flag: it tells you the government needs volume, not targeted assistance.

**Does saving $35,000 in stamp duty make off-the-plan apartments profitable?**
Not if the underlying asset depreciates or stagnates in value. A $35,000 saving means nothing against a property that loses $50,000-$100,000 in real value over five years due to oversupply and building depreciation. You need to evaluate the total return, not just the entry cost.

**Why do you say houses are better investments than apartments?**
Because land appreciates and buildings depreciate. In an apartment, your land component might be 25-35% of the purchase price. In a house, we target 80%+. Over 10 years, the compound effect of land appreciation versus building depreciation creates an enormous wealth gap. Melbourne house prices have historically grown at 7% per annum; apartment prices have consistently underperformed that benchmark.

**What about townhouses — are they better than apartments?**
Marginally, but still not ideal for investment. Most townhouses in Melbourne sit on 200-300 square metres. At that size, you have already reached the end of the development chain — there is no subdivision potential, no granny flat potential, and limited upside beyond market-rate capital growth. We strongly advise against purchasing townhouses in any area where apartment density exceeds 10% of total housing stock.

## References

1. [State Revenue Office Victoria, 'Off-the-Plan Duty Concession', updated 2025.](https://www.sro.vic.gov.au/off-plan-duty-concession)
2. [Victorian Planning Authority, 'Plan Melbourne 2017-2050: Activity Centre Pilot Program', 2024 update.](https://vpa.vic.gov.au/project/activity-centres/)
3. [Australian Bureau of Statistics, 'Building Approvals, Victoria', Cat. No. 8731.0, June 2025.](https://www.abs.gov.au/statistics/industry/building-and-construction/building-approvals-australia)
4. [CoreLogic, 'Melbourne Unit Market Performance Report', Q2 2025.](https://www.corelogic.com.au/news-research)
5. [Victorian Cladding Safety Victoria, 'Cladding Rectification Program Progress Report', March 2025.](https://www.vic.gov.au/cladding-safety)
6. [Domain, 'Melbourne House vs Unit Price Growth — 10-Year Analysis', February 2025.](https://www.domain.com.au/research/)
7. [Reserve Bank of Australia, 'Statement on Monetary Policy', May 2025. Cash rate and mortgage rate data.](https://www.rba.gov.au/publications/smp/)
8. [PremiumRea internal data: granny flat construction costs ($110,000 + GST for 30sqm) and rental yield benchmarks (5-6%).](#)

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Source: https://premiumrea.com.au/blog/off-the-plan-stamp-duty-trap-victoria
Publisher: PremiumRea (Optima Real Estate) — Melbourne buyers agent