Owen Wilson, CEO of REA Group, says raising property taxes will slow Victoria’s recovery

The Victorian government announced new and increased property taxes, which is a major blow to the state’s real estate market.

When the CBD is far from the hustle and bustle of Melbourne,
Our store has reduced the flow of people, the office is half empty, and there is no migration; the implementation of a progressive tax system can only be said to be short-sighted.

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This is why every Victorian person should care. The proposed measures will not only hinder economic growth, but will also harm the interests of all Victorians, preventing many people from renting, buying and selling.

why? Because it is inevitable, because these taxes will be levied on developers, investors and commercial owners, but these costs will be passed on to the already struggling small businesses, young tenants and front-line workers.

Suburbs that have been affected by the pandemic and popular among renters and students, such as Carlton or Hawthorne, will feel the pressure. The median house price in Hawthorne, where Swinburne University is located, is close to $2.4 million.

From January 1, the landlord of any student shared house in the suburb may collect a land tax of approximately $6,000 per year. This is equivalent to an increase of 19.2%. This part of the cost may come from the tenants’ pockets, which means that the money spent on bars, restaurants, cinemas and shops has also been reduced.

Land taxes in Victoria are already higher than in any other state, and these additional increases follow a series of other reforms for landlords in recent years.

Ultimately, these measures may reduce the level of rental housing, which will push up rents and also affect the development of new housing.

The result will be a further imbalance between supply and demand, pushing up rents and housing prices again.

Wilson said that the proposed measures will not only hinder economic growth, but will also harm the interests of all Victorians.

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Housing is a basic human need, and we need to do more to support the most vulnerable people in society.

Homelessness in Australia is getting worse, not better. In a prosperous country like ours, this is simply unacceptable.

Although the Victorian government has an aggressive plan to invest in social and public housing, these tax increases are counterintuitive to alleviate this problem. On the contrary, they may raise prices and rents, exacerbating the problem.

From July 1, the stamp duty on real estate worth US$2 million or more will increase by 18.2%, which is equivalent to an additional US$20,000.

Stamp duty is a diminishing, inefficient and unreliable tax. We have been calling for the abolition of stamp duty.

According to the proposal of the New South Wales Government, the phasing out of stamp duty will be an important contribution to Australia’s economic recovery after COVID-19.

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Stamp duty penalizes a small group of people who wish to conduct real estate transactions every year.

This is an unstable tax base, which depends on changes in the real estate market and fluctuates greatly.

If people stop buying and selling, the government will not get the expected revenue.

Victoria’s real estate industry currently pays 59% of the state’s taxes.

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This tax will hinder or even prevent people from buying property or moving.

It prevents workers from living closer to their workplace, or prevents them from interstate employment.

This also means that people will be punished for moving to a more suitable accommodation environment based on their life stage, such as downsizing from a four-bedroom house when their adult children are out.

Victoria’s real estate industry has paid up to 59% of the state’s taxes.

By reducing the country’s attractiveness as a place for investment and property development, this will have a negative and lasting impact on employment.

Victoria has a quarter of people employed in the real estate and construction industry, and the new tax increase in this industry will hinder job growth and hinder the state’s economic recovery.

The regressive tax system has no place in our recovery, especially if the real estate industry will continue to play a fundamental role in rebuilding our economy.

As we exit COVID-19, it is time for bold reforms to help the country emerge from its first recession in 30 years.

State and federal governments need to play a leadership role in important policy and reform areas, such as job creation.

After almost stagnating during Australia’s toughest lockdown last year, Victoria’s real estate industry has shown resilience and successfully overcome restrictions.

Today, the real estate market is moving forward again.

Our industry welcomes the opportunity to work with the government to find more sustainable ways to bring economic prosperity to all Victorians.