Australia Housing Market: Victoria\\\'s Land Taxes Driving Investors Away

Investors in the Australia housing market are fleeing Victoria due to soaring land taxes, leading to concerns about rental property availability. Learn more about the implications of this trend and how it is shaping the property market.

Investors are turning away from Victoria's property market in search of states with lower taxes, sparking concerns about the future availability of rental properties. Recent data from the Australian Bureau of Statistics shows that only 30.6% of housing loans in April were taken out by investors in Victoria, leading to a decrease in the supply of rental properties. In contrast, investors made up 40.5% of housing loans in NSW, 37.6% in Queensland, 35.8% in South Australia, and 37% in Western Australia during the same period.

Australia Housing Market: Victoria's Land Taxes Driving Investors Away

Despite the challenges faced by Victoria's property market, there is a silver lining as first home buyers are returning to Melbourne. In April, 24.9% of all property loans in Victoria went to first home buyers, the highest rate in the nation. This trend is helping to offset the loss of property investors in the market.

Melbourne is no longer the second most expensive city for houses, with Brisbane taking the title with a median house price of $937,479. House prices in Brisbane saw a significant increase of 15.9% over the year to May, outpacing other major cities. This rise in house prices is contributing to the supply shortage of rental properties in Melbourne, where vacancy rates are at a record low of 0.8%.

The Victorian government has implemented measures to address the housing crisis, including a COVID-19 debt levy and stricter energy efficiency standards for rented homes. However, challenges remain as Melburnians face high stamp duty costs and a lack of affordable housing options. A survey by Property Investments Professionals of Australia ranked Victoria as the least attractive state for housing investors, with a high percentage of investors selling their properties in Melbourne.

To alleviate pressure on the Australia housing market, the state government has set a target to build an average of 80,000 houses per year for the next decade. Despite record numbers of homes being built before the pandemic, recent construction rates have not kept pace with population growth, leading to rising prices and rents.

The exodus of property investors from Victoria is impacting the supply of rental properties and contributing to the current rental crisis. While first home buyers are helping to fill the gap, more needs to be done to address the housing affordability issue in the state.