How has the Stamp Duty Change Affected Sale Prices in NSW?

In June 2016 we received exciting news when the NSW Government announced that, ‘Duty on the transfer of business assets or a declaration of trust over 'business assets' (other than land) will be abolished from 1 July 2016.’

Further details can be found on the NSW Office of State Revenue website - http://www.osr.nsw.gov.au/taxes/transfer-land

This was (and is) great news for all pharmacy business buyers in NSW and represents significant savings on all business purchases.

Over one year on, we have reviewed our market sales data to examine how this change to stamp duty has impacted on sale prices in NSW. Interestingly, our market evidence shows that the capitalisation rates for pharmacy business sales in NSW have decreased from August 2016 to August 2017. (Remember that capitalisation rates and prices are inversely related so a decrease in capitalisation rate represents an increase in sale price). This shows that buyers are likely to be using the funds they have saved on Stamp Duty and adding this to their offer price for a particular business.

While our data indicates that capitalisation rates have decreased over all the east coast states during this time, the decrease is larger for NSW pharmacies, in both metropolitan and rural locations. Therefore, it seems likely that the change in Stamp Duty has caused the decrease (or at least part of it) in capitalisation rates and hence the increase in the prices being paid for NSW pharmacies.

Perhaps the Stamp Duty variation is one of the reasons why Melbourne pharmacies have historically sold at lower capitalisation rates than Sydney pharmacies!

 

If you are looking to buy a pharmacy in NSW, we have a number of opportunities available. Call us today on 1300 ATTAIN (288 246) and let us know what you are looking for!

Alternatively, if you are looking to sell your pharmacy, we would be happy to complete a complimentary Market Assessment for you given current market conditions.

 

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