Is Victoria’s property market out of the woods?
Industry experts have warned that even with the stabilisation of the Victorian housing market, the state has not addressed the “unprecedented challenges” fuelling the lack of new housing supply.
Despite the recent stabilisation of the Victorian housing market, director at Savills Australia, Benson Zhou, has voiced that this doesn’t mean the property sector is “on the mend”.
You’re out of free articles for this month
To continue reading the rest of this article, please log in.
Create free account to get unlimited news articles and more!
Zhou highlighted that the Victorian housing sector is facing “unprecedented challenges” in the form of the state’s hidden costs of land development that have resulted in a “critical housing supply shortage”.
The director detailed that the volatile state of the construction industry has increasingly motivated developers to devote portions of their budget to contingency plans that can “offset unpredictable costs”; the material impact of these extra costs then leading to housing price increases.
These increased costs were cited by Zhou as responsible for the weaker performance of the Melbourne housing and developer market last year compared to the other capitals.
When it comes to future expectations for the state’s capital, Zhou stated that “it could be a strong underdog story for Melbourne”, but cautioned that “trying to predict Melbourne’s rise is tough as values continue to dip and interest rate(s) remain high”.
“There is chatter about cuts but amid stubborn high inflation, cuts might not happen until the middle of next year,” stated Zhou.
Even with these challenges, the director still noted that “Victoria could see housing prices rise quicker than any state in the long term”.
“We need key factors to fall into place first such as interest rate falls, an improvement of affordability and rent to stabilise,” he said.
Nonetheless, Zhou stated that Victoria had endured as an appealing investor location, with the director’s tenanted properties selling well, but also emphasised that the state could improve its investment prospects through cutting its taxes.
Ultimately, Zhou expressed that although “the current market is having some turbulence”, there are also “great opportunities for growth” within Victoria.
But “in order to make it more feasible for investors, we need to see less tax as Victoria is paying more than any other state across Australia”, the director concluded.