“My concern is equally for tenants who are finding that the increased costs of accommodation are making their businesses less viable. We should all move to Perth or Brisbane – but sure as hell not to Victoria.”
Sahil Bhasin, founder of Bricks & Mortar Real Estate, said Victoria has the highest property taxes in the nation. He said the state has more than 16 property-related taxes compared to around three in other states and territories.
These include the highest stamp duty, equal highest foreign investment review board (FIRB) tax (for foreign buyers), and among the highest land taxes.
There is also a COVID-19 levy to help pay for the costs of the pandemic, a windfall gains tax of more than 62 per cent, cladding rectification levy, a tax on developer agreements, a “growth areas infrastructure contribution” and absentee owner surcharge.
The FIRB tax is expected to increase from $28,000 to $84,000 next financial year.
“Why would you ever want to buy in Victoria? It is the most expensive state to hold a property. It would be cheaper to rent for the rest of your life,” Mr Bhasin said.
Liz Jensen, a director of Kay & Burton, a real estate agency in Portsea, a traditional holiday destination for the wealthy around 110 kilometres south-west of Melbourne, said: “It’s creating a lot of angst. Locals could not believe they were going to be slugged with even higher taxes after the COVID-19 levy. It is a big slap in the face and residents are outraged.”
Some investors who diversified into property to boost their retirement income with rentals say they are selling because of the high property management expenses.
Veteran developer Nigel Satterley said Melbourne and Geelong, the country’s biggest residential house-and-land market – is suffering from a significant sales slump among owner occupiers and property investors because of new state taxes and levies.
The Victorian government has increased taxes on property owners in a bid to help pay for massive infrastructure bills that are expected to blow out by another $11.7 billion to more than $126 billion.
That includes dropping the tax-free threshold for land from $300,000 to $50,000 and a COVID-19 surcharge of $500 for taxable landholdings between $50,000 and $100,000, rising to $975 for property valued up to $300,000.
For property valued at more than $300,000, or trusts with property valued at over $250,000, there will be a $975 fixed surcharge and a tax increase of 0.10 per cent of the value of the landholdings. The COVID-19 surcharge commenced on July 1, 2023 and applies for 10 years until June 30, 2033.
Barbara Wolveridge, a director of Sotheby’s International based in Port Douglas in far north Queensland, says potential investors are “arriving in droves” because of the high taxes and living costs in Melbourne.
“We are getting a very, very good level of inquiries,” she said. “They are buying and staying when they can and putting up the property for rent the rest of the time.”
Rich Harvey, chief executive of Sydney-based buyers’ agency Propertybuyer, says: “There is definitely an exodus heading north because of the lower stamp duty and higher land tax threshold.”
But investors who believe the gap in growth rates between Melbourne and other major capitals will eventually narrow might consider it a buying opportunity, Mr Harvey said.
Phoebe Blamey, director of Melbourne-based mortgage broker Clover Financial Solutions, said: “Brisbane is hot”.
“Investors are getting more money and paying lower taxes. Who wants to invest in Victoria where the government spends too much and expects investors to pay?”
“Brisbane is hot,” mortgage broker Phoebe Blamey says.
That’s despite Victorian rental prices leaping by nearly 11 per cent during January, the nation’s second highest after Perth and regional Western Australia, or more than 2½ times the rate of inflation, according to CoreLogic, which monitors property market prices.
Agents claim those planning to invest are looking outside of Victoria, while increasing numbers of investors in Victoria are deciding to sell.
In Perth, Karen Firth, a director of the Art of Real Estate, said there has been a sharp increase in Melbourne and Sydney buyers during the past 12 months.
“We have a serious undersupply of property that is leading to a steep increase in prices,” Ms Firth said.
Perth rents have doubled in the past two years because of a shortage of property with inquiries for available stock routinely topping more than 100, she said.
Perth property prices are at a record high having increased by more than 18 per cent during the past 12 months, according to CoreLogic.
Brisbane and Adelaide are also at record growth highs of nearly 16 per cent and 12 per cent respectively over the same period, its analysis shows.
By comparison, Victoria dwellings returned 4 per cent, or about $779,000, for the same period. Victoria is now more than 4 per cent below its record high, which was in March 2022, the analysis shows. The Victorian state government declined to comment.