Victoria’s housing market needs urgent stimulus to bring buyers back and revive residential development, according to the Property Council of Australia, which is calling for sweeping property tax reforms after new polling revealed widespread concern about housing affordability.
The Property Council-commissioned survey of 3,863 Victorian adults, conducted by Roy Morgan between 8 and 12 October, found 80.7 per cent of respondents blamed the Victorian Government’s 32 new and increased property taxes since 2014 for placing pressure on household budgets and increasing the cost of owning or renting a home.
Housing affordability was a concern for 88 per cent of respondents, while two-thirds believed reducing taxes and charges would encourage greater private investment in housing.
More than 40 per cent also identified taxes and charges as a key barrier to increasing housing supply, highlighting concerns about the relationship between government policy, development feasibility and the availability of new homes.
The Property Council argues the consequences are extending beyond affordability, with weaker buyer demand affecting off-the-plan sales, project financing and the commencement of new residential developments.
Property Council Group Executive Policy and Advocacy Matthew Kandelaars said Victoria’s property tax environment was discouraging investment and making it increasingly difficult to deliver the homes needed to meet future demand.
“The state’s punishing property tax burden is hurting Victorians, driving away investment and stalling new housing projects,” Mr Kandelaars said.
Buyer confidence and development feasibility under pressure
The Property Council warned that a combination of weak buyer demand and mounting development costs was creating a difficult environment for residential projects, particularly where developers rely on pre-sales to secure construction finance.
Mr Kandelaars said the absence of buyers was having consequences throughout the housing development pipeline, with developers unable to justify commencing projects without sufficient confidence that properties would sell.
“We’re facing a dangerous double whammy. Buyers are sitting on the sidelines and developers can’t justify starting new projects.
“When buyers disappear, pre-sales dry up, banks won’t finance projects and construction grinds to a halt.
“No buyers means no projects. No projects means no new homes. It’s that simple.”
The warning has implications for agents working in project marketing and off-the-plan sales, where buyer commitments are often an important component of development financing.
According to the Property Council, Victoria’s tax settings are contributing to a cycle in which subdued demand makes new projects less viable, potentially restricting the supply of homes available to future buyers.
While the polling measures public attitudes rather than directly establishing the impact of individual taxes on property transactions or construction activity, the Property Council argues the findings demonstrate support for changes to the state’s housing tax system.
Calls for stamp duty relief and a $25,000 downsizer bonus
To encourage buyers back into the market and support new housing construction, the Property Council is calling for an immediate stimulus package combining tax relief with targeted incentives for purchasers.
Its proposals include eliminating stamp duty on all new builds, introducing a $25,000 downsizer bonus and increasing the first home owner grant to $20,000.
The proposed measures would target several important buyer groups, including first home buyers, purchasers considering newly constructed properties and older homeowners looking to move into smaller homes.
The Property Council is also seeking the complete abolition of Victoria’s Absentee Owner Surcharge, arguing that it discourages housing investment involving overseas capital, including partnerships between Australian developers and international pension funds.
It has additionally called for the Windfall Gains Tax to be abolished, claiming the tax discourages landowners and developers from pursuing opportunities to convert land into residential housing.
The organisation argues that removing these taxes would improve development feasibility and encourage investment in new housing supply, although the proposals remain industry recommendations rather than announced government policy.
‘Victoria’s housing market is on life support’
Mr Kandelaars accused the Victorian Government of relying too heavily on property taxation at a time when the state needed to attract investment and stimulate residential construction.
“With its overspending and record debt, the government has become addicted to taxing the sector responsible for delivering the homes Victoria needs,” he said.
“The government has had its hand in the pocket of homebuyers and renters for the past 12 years, and Victorians know it.”
He said action was needed on both sides of the housing market, with measures to encourage purchasing activity alongside changes designed to improve the viability of new developments.
“Victoria’s housing market is on life support. Demand stimulus to help buyers, while abolishing taxes that hurt supply, is the urgent defibrillator double-shock that is our only hope of bringing it back from the brink.”
The Property Council’s intervention comes as the industry continues to debate how governments can improve housing affordability while encouraging the private investment needed to increase residential supply.
For agents, the proposals place renewed attention on the role of transaction costs, buyer incentives and development feasibility in shaping market activity, particularly in the new-build sector.
The Property Council maintains that without changes to the state’s tax settings and measures to stimulate demand, Victoria risks prolonging the conditions it says are preventing new residential projects from proceeding.