Recent data analysis featured in PropTrack Market Insights indicates the higher land taxes imposed by the Victorian government have impacted the Victorian rental market in several ways.
New land tax thresholds were announced by the Victorian government in May 2023 and came into effect in January 2024. For perspective, the cost increase on unimproved land valued at $500K amounted to an additional $1,175 per annum and impacted an estimated half a million investors.
In analysis comparing rental properties sold in Victoria with other states since the new land tax thresholds were announced in May 2023, PropTrack found an increase of almost 5000 more investors selling Victorian investment properties.
The study also found that there have been fewer investors seeking investment loans since the land tax changes were announced.
However, other factors such as market conditions may also have influenced investor selling activity. And it is worth noting that some investment properties will have been bought by new investors and first home buyers who are leaving the rental market.
But the PropTrack analysis suggests that lower investment activity does raise concerns about decreased housing constructions projects leading to further housing shortages, higher house prices and increased rents in years to come.
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