Big auction sales as Melbourne market grapples with higher stamp duty charges
A family home in Melbourne’s inner south that had been newly renovated sold under the hammer on the weekend for a massive $7.9 million.
The home at 312 Danks Street, Middle Park, saw three local buyers compete in a hot auction where a vendor’s bid of $7 million kicked off the proceedings.
Marshall White Port Phillip director and auctioneer Oliver Bruce said the vendors, who had originally bought the property in 2016 for $4.95 million, had been living there until starting a major renovation.
After COVID-19, the family decided to move to “the country” and listed the home for sale, Mr Bruce said, and a family from the local area snapped it up on Saturday.
It had sold for such a huge price because of the large size of the block, which was rare in Middle Park, he said.
The huge sale came on a weekend where the Victorian government announced those buying a home for more than $2 million across the state, would pay more stamp duty — with a premium duty rate of 6.5 per cent being introduced, jumping from the usual 5.5 per cent on July 1.
Land taxes for investors would also rise by 0.25 percentage points for land holdings worth between $1.8 million and $3 million and 0.3 percentage points for holdings above $3 million from the start of 2022.
That announcement drew the ire of many in the real estate game, with the Real Estate Institute of Victoria calling the extra charges “sledgehammer taxes” that would harm the industry and buyers and investors alike.
“Property already accounts for more than 40 per cent of government revenue,” REIV president Leah Calnan said. “There is not much more capacity [for] any one sector to absorb further tax burden.”
Buyers were still learning about the changes at the weekend, Mr Bruce said.
“We did discuss it with a couple of people, and the people we discussed it with were very perplexed because we’re already at such high levels of stamp duty anyway,” he said.
It didn’t stop sales from going ahead, as Melbourne celebrated another “super Saturday” where more than 1000 auctions were planned.
Melbourne’s preliminary clearance rate was 77.3 per cent after 1159 auctions were scheduled and 887 results were reported. There were 71 properties withdrawn from auction that were recorded as not being sold.
While some buyers were perplexed with the announcement of extra stamp duty, others were less than happy with the news.
“Buyers are annoyed, they feel it’s unfair, inequitable and that they were targeted,” Kay & Burton Hawthorn director Scott Patterson said.
But he said he believed the market would keep moving even if people were forced to pay more stamp duty or land taxes.
Mr Patterson helped sell several multimillion-dollar properties in Melbourne’s inner east including a five-bedroom home at 68 Molesworth Street, Kew, which sold for $6,632,000.
Three bidders fought it out for the keys. The buyers were a family who had bid on another property earlier in the day.
The earlier property, at 10 Edward Street, Kew, sold under the hammer for $5.9 million — above the $5.4 million reserve — to a family.
The vendors, who had owned the property for 30 years, were selling up to downsize, Mr Patterson said.
In Richmond, a house that did not receive a single bid sold after the auction when two buyers went into a post-auction, auction-type sale.
The home at 84 Highett Street, Richmond, sold for $3.69 million, after passing in.
Biggin & Scott Richmond director and auctioneer Russell Cambridge said three bidders had turned up on the day, with two of them fighting it out post auction.
“What it shows is that it doesn’t pay to hold back at auction,” Mr Cambridge said. “Because no one bid we then had to negotiate with both buyers.”
Mr Cambridge said he had spoken to buyers about the new stamp duty and land taxes and said there had been “a bit of angst”.
“People are not that impressed,” Mr Cambridge said. “It seems the government is always targeting the property industry — they’re forever biting the hand that feeds them.”
One bidder in South Melbourne on Saturday asked if they could bring their settlement forward to June 30 to save on stamp duty, Greg Hocking Holdsworth agent Warwick Gardiner said, although they were unsure if it applied from contract or settlement date and missed out on buying the home.
“It is a blow for home-owners and purchasers,” Mr Gardiner said.
“It doesn’t make any sense, raising stamp duty in an environment where we are trying to get the economy back on track.”
In Thornbury, a couple who had been planning to buy a home in 12 months instead decided to bid this morning to save on tax, Jellis Craig Northcote director Sam Rigopoulos said, although they also missed out.
“[They were thinking] ‘It will cost me an extra $20,000 to buy this house in 12 months’,” he said. “It was enough to get them to have a crack.”
He said the increase was not welcome news for buyers and sellers in the $2 million-plus market.
“People can probably absorb that, albeit begrudgingly,” he said.
“Stamp duty reform is required across the board. The increase at the top end I don’t think is the right answer.”
In one negotiation on Saturday, a high-end buyer requested a short settlement to avoid paying extra stamp duty.
The Armadale home sold for more than $5 million on a 30-day settlement, Kay & Burton’s Andrew Smith said. At that price point, most settlements would be 60 days or even 90.
The buyer hoped to save about $50,000 in stamp duty by bringing the deal forward.
The state government confirmed later on Saturday that the contract date was the relevant date for assessing stamp duty liabilities, meaning someone who has signed but not settled by the cut-off would not have to pay the higher amount.
With Elizabeth Redman
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