Why Are Investors Entering (and Exiting) Victoria’s Market?
For years, property investors have been directing their attention toward Adelaide and Brisbane, lured by strong capital growth, attractive yields, and relatively investor-friendly regulations. This heightened demand, however, has now led to significant price increases in those markets, reducing affordability and making it harder to find value. As a result, many investors are now reconsidering Victoria as an alternative investment destination.
Why Victoria is Back on the Radar
Victoria’s property market has seen less attention in recent years, allowing it to remain relatively stable compared to the more inflated markets of Queensland and South Australia. With fewer buyers competing for properties, investors are finding better opportunities in Melbourne and regional Victoria, particularly in areas with strong infrastructure, population growth, and rental demand.
Additionally, Melbourne’s long-term fundamentals remain solid. As Australia’s fastest-growing city, it boasts a diverse economy, world-class universities, and ongoing investment in transport and infrastructure. The relative affordability compared to Sydney, coupled with steady rental demand, makes it an attractive proposition for those looking to build their portfolio.
What Investors Need to Consider
While Victoria presents opportunities, it also comes with higher costs and regulatory challenges that investors, particularly those from interstate, need to be aware of:
Higher Stamp Duty Victoria has one of the highest stamp duty rates in the country, significantly increasing entry costs for investors. Unlike some states with stamp duty concessions for off-the-plan purchases, Victoria offers fewer incentives for investors.
Increased Land Tax The Victorian government has implemented higher land tax rates, with additional surcharges for foreign buyers. This can substantially impact investors holding multiple properties, reducing overall returns.
Tenant-Favourable Rental Laws Victoria’s rental laws are among the most tenant-friendly in Australia. Recent reforms have strengthened renters’ rights, including restrictions on rental increases, a longer list of mandatory property standards, and tougher eviction rules. While these protections create stability for tenants, they can also make it more challenging for landlords to manage their properties effectively.
Who is Exiting Victoria?
The increasing costs and regulatory burdens have led some long-term investors to exit the Victorian market in search of lower-taxed, more investor-friendly environments. Many have turned to Perth and even regional NSW, where the tax burden is lower and rental laws provide more flexibility for landlords. Additionally, those with large portfolios have been particularly impacted by rising land tax bills, making it less viable to hold multiple properties in Victoria.
Is Victoria the Right Investment Market for You?
For savvy investors who understand the market dynamics and are willing to navigate the compliance landscape, Victoria still presents excellent long-term opportunities. The key is to factor in the additional costs and ensure that investment strategies align with the state’s regulatory framework.
While some investors are leaving Victoria, others are seeing the value in re-entering a market that has been overlooked for too long. As the balance shifts away from overheated markets like Brisbane and Adelaide, Victoria’s stability and long-term potential are once again drawing attention.
Are you considering investing in Victoria? Reach out to discuss how to navigate the market successfully and make informed property decisions.