Off-the-plan apartments that fail to settle will be deemed by the Australian Tax Office to be second-hand, according to a report in The Australian, and could mean lower prices for local first-home buyers. Apartments deemed to be second hand are not available for sale to foreign buyers.

An increasing number of apartments are coming onto the market from failed off-the-plan sales, according to the report in The Australian. Brisbane and Melbourne are said to have been particularly affected.

The ATO ruling will prevent thousands of foreign investors from buying, and is likely to weaken the sale prices.

The ATO said in a statement to The Australian, “When a property developer is selling a new apartment ‘off the plan’, the apartment will change status from ‘new’ to ‘established’ when the contract for that ‘new’ apartment becomes binding."

“If an apartment is on-sold after a contract becomes binding but before settlement, the apartment would be considered ‘established’,” said the statement.

See also:

Housing finance data confirms fewer first-home buyers

Foreign buyers cooling towards Aussie property

Angry responses to new foreign investor taxes