Victoria’s economy is now so sick that property investors are scared to buy a house in the state despite a surge in immigration.
Before resigning as premier last year, Daniel Andrews imposed a flat $975 annual tax on investor land owners to repay $31.5billion worth of debt brought on by the state’s excessive Covid lockdown.
But for the average landlord with a $650,000 property, the average yearly cost rises to $1,300.
Investors are now shying away from the state due to that tax and fears that further levies will be imposed by the deeply-indebted Labor government.
The tax started in January 2024 and by April, Queensland had already overtaken Victoria as the state with the second-highest level of new investor loans, behind NSW.
This is despite Queensland having almost 1.4million fewer residents than Victoria and a slower population growth pace due to Melbourne’s vast numbers of migrants.
Victoria has also slipped to third in new investor lending – a situation that last occurred in August 2009 after the worst of the Global Financial Crisis.
Queensland now has a 22.6 per cent share of new investor loans, compared with Victoria’s 19.9 per cent share.
Victoria’s economy is now so sick property investors are too scared to buy a house there despite a surge in overseas migration (pictured is an aerial view of Melbourne)
Melbourne was Australia’s worst performing capital city property market in 2024, despite receiving a big influx of overseas migrants (pictured, an auction in Melbourne)
Brett Warren, a national director of buyers’ agency Metropole, said Queensland was bound to have more investment properties than Victoria, if the trend continued.
‘With Queensland’s continued momentum, it’s expected the state will surpass Victoria very soon, becoming Australia’s second-largest property investor market,’ he said.
‘One key reason for this shift is the changing tax landscape in Victoria.
‘The introduction of a flat-rate levy for property investors, combined with additional taxes on landholdings, has made Victoria a less attractive market for investors.
‘Many have begun to look elsewhere, with Queensland becoming the new destination of choice.’
Melbourne was Australia’s worst performing capital city property market in 2024, despite receiving a big influx of overseas migrants.
The city’s median house price shrunk by 2.3 per cent in the year to November to $923,422, CoreLogic data showed.
This occurred as Brisbane’s equivalent mid-point house price climbed by 11 per cent to $974,396, with the Queensland capital in May overtaking Melbourne to become Australia’s second most expensive big city market after Sydney.
Before resigning as premier last year, Daniel Andrews (left with his successor Jacinta Allan) imposed a flat $975 annual investor land tax in a bid to repay $31.5billion worth of Covid debt
House prices in Victoria have gone backwards even though the state’s population growth pace of 2.4 per cent during the last financial year was actually stronger than Queensland’s 2.3 per cent level.
Queensland gets a big influx of interstate migrants fleeing Sydney and Melbourne, while Victoria relies more on overseas arrivals.
‘As more people move to Queensland, driven by the more affordable cost of living and lifestyle benefits, the demand for housing continues to increase,’ Mr Warren said.
‘The lifestyle appeal of these areas is only growing, making Queensland an even more desirable location for both owner-occupiers and investors.’
Unlike unaffordable Sydney, Melbourne isn’t seeing a big exodus of local residents to other states in search of cheaper housing.
On the housing front, that means the Victorian housing market is still strong for owner-occupier mortgages as investors continue to chase capital growth in Queensland.
But Brisbane has a much lower rental vacancy rate of 1.1 per cent, compared with Melbourne’s 2 per cent level, with the SQM Research data highlighting how Queensland is a more attractive place to be a landlord.
‘As tax changes push investors out of Victoria and affordable, high-yield opportunities emerge in Queensland, it’s likely that the Sunshine State will continue to gain momentum in the years to come,’ Mr Warren said.
When it comes to economy activity, Victoria’s unemployment rate of 4.2 per cent is significantly higher than the national average of 3.9 per cent, which is also the jobless level for Queensland and NSW.
