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Victoria's planned tax hikes on property could potentially worsen housing affordability and dampen demand, says an expert from the Housing Industry Association (HIA).
Fiona Nield, executive director for Victoria at the HIA, said rising property taxes is a “short-sighted” and an “unfair” move by the state government.
"It is unfair to be taxing landowners further on property when Victoria already has the highest stamp duty rates in the country. It is also short-sighted to be adding a greater tax burden on housing when it already contributes up to half of the state’s revenue each year," she said.
The state government has announced its plans to impose a new windfall gains tax on transactions that have benefitted from rezoning. Up to 50% tax hike will be applied starting 1 July 2022.
"The new windfall gains tax is particularly concerning and appears to take a disproportionate share of property value from landowners that are in fact helping to support the growth in housing supply that helps keep affordability in check across regional Victoria," Nield said.
Nield said this change will further worsen the affordability in regional markets and will have impact on home buyers at all levels.
"Changing the goal posts after property has been purchased is unfair. It seems this will particularly impact in regional Victoria-as some urban growth land in Melbourne may be exempted," she said.
Furthermore, the state will charge a higher stamp duty for property transactions breaking the $2m cap. Such transactions will be charged with $110,000 higher stamp duty plus an additional 6.5% of the dutiable value in excess of $2m.
"New taxes like these are passed on in higher land prices for all and stamp duty inhibits people from selling properties to allow for new homes to be built — it has direct impact on new housing affordability," Nield said.
