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Investor exodus means now is the time to buy in Victoria
Investor exodus Victoria

With the prevailing narrative being that property investors are fleeing Victoria in droves, we believe that savvy investors should be doing the opposite.

There had been much media attention on investors deserting Victoria because of its new land tax policy as well as a raft of rental reforms, but the fundamentals of the nation’s second most populous state remained overwhelmingly positive. Now is the time to invest in Victoria because of much lower competition from other investors.

In the grand scheme of things, property expenses and taxes are part and parcel of owning investment properties over the long-term and they are tax deductible. The key is to recognise that Victoria continues to be a sound property investment location with solid prospects for cash flow and capital growth over the years ahead.

While it is apparent that many investors had sold their dwellings in the State in protest against the new land tax regime, we think the smarter move is to ride it out.

No one likes new taxes or levies, but it is illogical to believe that Victoria – which is home to nearly seven million people let’s not forget – does not offer a plethora of opportunities for investors now and into the future.

Not only are there fewer buyers on the ground, property prices have been subdued over the past year, and the vacancy rate in Melbourne is just one per cent.

In fact, the exodus of investors from the State is likely to result in a prolonged rental catastrophe that will push rents higher, which is a terrible situation for renters.

On the other side of the country, we believe too many investors are piling into Perth, when that market had most likely passed its peak.

Perth is over-cooked with many investors overpaying for inferior dwellings, because seemingly the Western Australian capital is still the ‘new property black’.

Meanwhile, the smartest investors are cherry-picking the best opportunities in Victoria that offer superior upside potential for anyone who is prepared to look past the current rental reform and tax agenda.

Of course other states have also passed rental reforms but those haven’t hit the headlines in the same way because Victoria’s land tax is the one that directly and more swiftly hits the investor’s bottom line. Even though the Victorian land tax is a hideous and outrageous cash grab, it’s important that people stop demonising Victoria.

At the end of the day, minimum standards for properties do still cost investor’s money – they can’t get around that regardless of what state they invest in.

Image credit: DepositPhotos

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