THE State Government has been accused of “punching” investors out of the residential property market across regional Victoria as a tighter land tax bites hard.
While the commercial and blue-chip residential property markets are thriving in Sunraysia after last year’s overall slump, one major concern is a drop-off in investors after the government targeted landowners to help pay back some of Victoria’s gross debt, which is projected to reach $247.2 billion by 2027.
Two Mildura real estate agents this week reported that since the government reduced the tax-free threshold for land tax from $300,000 to $50,000, as well as imposed new yearly flat fees from January 1, investors were now pivoting out of the residential market.
Ryan Tierney, director of Tierney Real Estate, said that “we can’t even buy an enquiry for land at the moment” as agents struggle to sell the 300-plus vacant blocks of land in Sunraysia.
“The cost-of-living pressures had already been hitting people hard for months, and the investor drop-off has been noticeable over the past two months since the extra land tax came into effect,” Mr Tierney said.
“What’s happened is that the government has backflipped and gone, ‘hang on, we’re missing all these regional places for tax, so let’s change that threshold from $300,000 to $50,000’. But you can’t even buy a block of land for $50,000 in Ouyen.
“The majority of the blocks of land in Mildura are now worth $100,000. Even Merbein and Red Cliffs are hitting the $100k mark. It automatically puts anyone with investments with a flat annual fee of $975 before the additional costs are worked out.”
He said the extra slug would mean “investors either put the rent up or are starting to look to sell their investment property”.
“I’ve already had two out-of-town investors sell up since January 1. This extra tax came on the back of all the cost-of-living pressures, rising interest rates and other compliance measures, so you can understand it.
“They are the ones getting punched by the government. They are now saying that from an investment point of view, ‘Victoria is not for me and I’m out’.”
Damian Portaro, managing director of Ray White Mildura, said the government’s tax whack on investors would continue to have a “negative impact” on the regional market in Victoria.
“I have a network of individuals who own a lot of property and the dialogue from them is not great, in terms of them looking to exit the Victorian market,” Mr Portaro said.
“But is it absolutely detrimental and going to crash the market here? No. Is it having a negative impact? Absolutely it is.
“The interesting part is that Mildura is one-third owned by investors. So you’d think we get a lot of enquiries for property from investors. But we haven’t got that.”
He was critical of the government’s “knee-jerk reaction” to try to “fix the problem they caused”.
“It’s a false economy. Left or right (wing), all we want is good government policy,” Mr Portaro said.
