What happened?
In 2024, Victoria began taxing property investors more. The change came alongside an increase in the minimum standards required of investment properties looking to be leased.
Not long after these changes, thousands of investors decided to sell up.
In 2026, Melbourne's house prices and rents are now lower than Sydney, Brisbane, Perth and Adelaide.
Experts say the changes meant Victoria had dis-incentised housing as a method of making money, helping first home buyers and renters.
Could we do this across the country?
How we got here
In 2021, the Victorian Government decided that landlords had to make homes liveable and introduced standards that implored landlords to:
Install a fixed heater in the main living area
Have gas and electrical safety checks once every two years
Make sure properties don’t have any mould or damp
The standards also mean properties would have until 2027 to:
Install ceiling insulation where none is present
Replace end of life heating and hot water systems with efficient electric alternatives
Install draught proofing on external doors, windows and wall vents
Then what happened?
In January 2024, Victorian property investors were then hit with a new annual land tax, with bills starting at $500 to potentially thousands.
While this might be a drop in the bucket for property investors with multiple homes, it was a bigger hit for mum-and-dad investors.
Over 70 percent of the 2.3 million property investors in Australia own just one property in addition to their home.
It’s a service
Professor Alan Morris, from the University of Technology Sydney, told the National Account the taxation from the Victorian Government drove down the number of home loans for investors in the state.
Morris said Melbourne’s population decline after the pandemic also played a role in increasing the vacancy rate of the city.
How much?
Cotality data shows Melbourne, despite being larger in population, has had its median home value surpassed by multiple capital cities across the country.
Sydney: $1,601,782
Melbourne: $982,876
Brisbane: $1,207,718
Adelaide: $998,933
Perth: $1,062,538
Hobart: $790,566
Canberra: $1,048,285
Darwin: $732,035
Rents
Professor Morris said investors are now able to charge less for rent as house prices drop or stabilise and mortgage repayments become lower.
In New South Wales, there are more property investors – and the market is still geared towards them. “Investors push up prices,” said Morris.
Money money money
Professor Morris also noted Sydney is a more affluent city than Melbourne.
“There's more disposable income… There are a lot of high income renters in Sydney. That also impacts the market. It's like it permeates downwards,” he said.
Thumbnail: AAP