Insights

As Head of Hodges Real Estate, I am deeply concerned about the current state of Victoria’s rental market. The recent PropTrack article highlights a surge in investor activity across Australia, yet Victoria stands as a notable exception. This divergence is not coincidental but a direct consequence of the state’s escalating land taxes and stringent regulations.

Over the past year, Victoria has witnessed a significant reduction in its rental housing stock, with over 24,000 rental properties exiting the market—a 3.6% decline in the state’s entire rental inventory . This exodus is primarily driven by increased land taxes and the cumulative effect of more than 130 rental law reforms since 2019.

The impact on renters is profound. With vacancy rates plummeting to around 1.08% , tenants are facing fierce competition for limited housing options. Consequently, average rents have surged, with many tenants paying approximately $7,800 more annually.

The state’s approach to property taxation, including the introduction of a new flat rate tax and additional levies on land value , is deterring investors and exacerbating the rental crisis. If this trend continues, Victoria risks further diminishing its rental housing supply, leading to increased financial strain on tenants and potential long-term economic repercussions.

It’s imperative for policymakers to recognise the unintended consequences of these tax policies and consider reforms that encourage investment while ensuring affordable housing for all Victorians.