📉The latest PropTrack data paints a stark picture: Melbourne continues to rank last among mainland capitals in median home value (second last of all capitals). Brisbane, Perth, and Adelaide post annual growth above 9%, while Melbourne trails at just 2.1% – the fourth year of essentially flat lining.
❓Why the extended decline?
• Tax: Victoria collected $17.2B in land tax and stamp duty last year – more than any other state, at higher rates and coming in at lower thresholds.
• Investor flight: “The Victorian state government is anti-business and adding large property taxes. It is killing the market,” says Daniel Hendler.
• Economic drag: “The overall Victorian economy is underperforming the rest of the states,” notes Paul Bloxham of HSBC.
The result?
⛔Developers are shelving projects.
⛔Investors are reallocating capital interstate.
⛔Demand remains relatively weak, bolstered only by recent interest rate cuts.
💥Affordability is indeed improving, but only because confidence has collapsed.
This is not sustainable in the long term. You cannot tax your way to affordability, nor can you continue punishing the very industry responsible for delivering housing.
🙃As Saul Eslake eloquently put it: “They’ve made an almighty mess of their finances—but one thing they might be getting right is housing affordability.”
🤔Affordability born of complete dysfunction is no victory.