How Will Victoria’s New Budget Affect Investors, Renters & First Home Buyers?
In This Week's How's The Market | Edition 48
How Will Victoria’s New Budget Affect Investors, Renters & First Home Buyers?
Two Parties Bid At Auction The Day They See The Home
Victoria’s auctions are heating up!
How Will Victoria’s New Budget Affect Investors, Renters & First Home Buyers?
Last night the Victorian government released their plans for the new budget which has included $8.6 billion in “temporary” levies that aim to claw back some of the money they spent on the Covid-19 crisis.
One of the tax levies that will stay in place for the next 10 years and target property investors is the reduced threshold on land tax. The land tax threshold on investment properties will drop from $300,000 to $50,000 of land value and is expected to apply to about 380,000 homeowners who would previously not have paid the tax.
An additional fixed charge will apply, starting at $500 for landholdings between $50,000 and $100,000 and rising to a $975 charge for landholdings above $100,000. Tax rates will temporarily increase by 0.1 per cent for both general and trust taxpayers, with holdings above $300,000 and $250,000 respectively.
The new proposed tax changes have been widely criticised by property councils and real estate groups as it disincentivises property investors from buying or holding assets in the state which could mean an even further reduction in rental supply for tenants.
Additionally, there is the worry that the increase in costs for landlords will simply be passed on to tenants making rental properties less affordable.
This could force more renters into the property market and put additional pressure on prices due to the already low supply.
As rental properties have become much harder to hold due to interest rates, we are already seeing droves of investors exiting the market and cashing out and believe this decision is likely to only make the problem worse.
For renters and first-home buyers, this also isn’t great news.
Many renters have been notified of increasing rents or are already feeling the brunt of a massive rental increase over the last few months. This has made many of the renters that were thinking about buying a property more inclined to do so, though even this has driven a large number of buyers into the marketplace putting price pressures on the extremely low stock that is currently on the market.
What The Agents Are Saying
The market is still heating up.
Auction clearance rates are at the highest levels they have been since Feb 2022 or Oct 2021 according to SQM Research’s data which was most notably the peak of the Covid boom.
Properties are selling strongly with urgency in the marketplace.
One agent told me earlier this week that she had an auction on Saturday that had two separate bidders that only saw the property for the first time on the day of the auction. They hadn’t been through the property for the entire campaign but had been looking for a while and were confident enough to bid. These were two separate bidders, bidding against one another.
Because of this activity, vendors are starting to get their confidence back and believe that it is a good time to sell. Many agents I have spoken to believe that Spring this year will be busy and make up for the very low listing volumes of the first half of the year.
A lot of the agents are getting listings now and scheduling them in for some of the bigger auction weekends in the Spring selling season now.
The Wow Factor!
61 Clendon Road, Toorak, Vic 3142
Another astonishing Toorak mansion set on over an acre of land that has just come onto the marketplace.
There are now 12 properties online in Toorak with price tags above $10m.
Check out the domed void that connects the library with the living area below!
Price guide: $42,000,000 - $46,000,000.
In The Media
Melbourne auctions: Balwyn house sells for $320k premium in front of big crowd
I do find it funny how quickly the media changes its tune. Just a matter of weeks ago, the big news stories in property all surrounded the ‘fixed rate cliff’ that was expected to crush house prices.
This article details some of the multiple different auction results that occurred across Melbourne last weekend in a range of different suburbs.
Final Thoughts
This week I have heard from real estate agents and mortgage brokers alike that they are getting busy. That is usually a strong sign that the market is heating up which gives me the feeling that we are in for a strong Spring market.
Thanks for reading this far!
We value feedback and if you have any suggestions on what you would like covered in the future please email me at tristan@tomii.com.au
Happy Buying!
Note: This is my opinion, please seek your own expert advice when making decisions.
