Victoria ranked second-worst state in Australia for investing in new homes | Housing Industry Association

Victoria has been ranked the nation’s second worst state for investment in new homes as “insane” tax changes by the government turn landlords off.

And after a decade fighting NSW for Australia’s top new housing market, it’s put the state in the doldrums — with South Australia, Queensland and Western Australia all now ranked higher by the country’s leading housing group.

The Housing Industry Association ranked Victoria the country’s fourth best state or territory in a nationwide Housing Scorecard released this week.

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While it was an improvement from being ranked seventh half a year ago, senior economist Tom Devitt said it was “not a great story coming out of Victoria”.

Victoria has been ranked the fourth-best state to invest in by the HIA.

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Government policy changes could give the state a lift and help meet government new housing construction targets, however Mr Devitt said they were currently just hoping the next state and federal budgets would “do no more harm”.

The economist said recent Victorian government tax tweaks were particularly “insane” given the state’s rental vacancy rate.

“The extra taxes on investors, whether they cause current investors to actively leave is a question mark, but one of the things that’s really hard to debate is that when you keep adding these costs you will discourage them from entering the market in the future,” he said.

Only the Northern Territory scored lower for investor activity in new homes, according to the HIA report.

And while its total number of house and unit approvals were good compared to many smaller states — they were at 10- and 15-year lows for the state respectively, with investors walking away a key part of the falls.

“Victoria is actually having the most acute declines, given their land costs are so much higher than other states — so you have seen new home sales fall off a cliff,” Mr Devitt said.

South Australia retained its position as the nation’s top-performing new home market, with both Victoria and New South Wales languishing.

The economist said while that persisted, it looked unlikely the nation would reach a federal target of building 240,000 homes a year as part of a five-year 1.2 million new homes goal.

He said at present we were on track to build just 150,000 this year.

Housing Industry Association senior economist Tom Devitt said they were just hoping the next state and federal budgets would “do no more harm’. Photo:Supplied

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“In their current position they are certainly not doing their fair share of what needs to be done for the next few years,” Mr Devitt said.

Mr Devitt added that to rapidly increase new home construction the best policy move governments could make would be to work together to remove or dramatically reduce the reliance on stamp duty.

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