Victoria’s economy is now so sick that property investors are too afraid to buy a home in the state despite increased overseas migration.
Before resigning as prime minister last year, Daniel Andrews imposed a flat annual land tax on investors of $975 in a bid to pay off $31.5 billion of debt from the Covid lockdown.
But for the average homeowner with a $650,000 property, the average annual cost rises to $1,300.
The tax began in January 2024 under his Labor successor Jacinta Allan, but by April Queensland had overtaken Victoria as the state with the second-highest level of lending to new investors.
This is despite Queensland having almost 1.4 million fewer residents than Victoria and a slower pace of population growth.
Victoria is Australia’s second most populous state after New South Wales, but it ranks third when it comes to the level of lending to new investors, a situation that last occurred in August 2009, after the worst of the global financial crisis.
By September, the gap had widened, with Queensland attracting $2.618 million in new investor loans, compared to $2.313 million for Victoria, Australian Bureau of Statistics loan funding data showed.
Queensland now has a 22.6 per cent share of lending to new investors, compared to Victoria’s 19.9 per cent share.
Victoria’s economy is now so sick that property investors are too afraid to buy a home there despite increased overseas migration (pictured is an aerial view of Melbourne).
Melbourne was the worst performing property market in Australia’s capital in 2024, despite receiving a large influx of foreign migrants (pictured, an auction in Melbourne)
Brett Warren, national director of buyers agency Metropole, said Queensland would almost certainly have more investment properties than Victoria if the trend continued.
“With continued momentum from Queensland, the state is expected to overtake Victoria very soon, becoming Australia’s second largest property investor market,” he said.
‘A key reason for this change is the changing tax landscape in Victoria.
‘The introduction of a flat rate for property investors, combined with additional property taxes, has made Victoria a less attractive market for investors.
“Many have started to look elsewhere, and Queensland has become the new destination of choice.”
Melbourne was the worst performing Australian capital property market in 2024, despite receiving a large influx of foreign migrants.
The city’s median house price fell 2.3 percent in the year to November to $923,422, CoreLogic data showed.
This came as Brisbane’s median equivalent house price rose 11 per cent to $974,396, and in May the Queensland capital overtook Melbourne to become Australia’s second most expensive urban market after Sydney.
Before resigning as prime minister last year, Daniel Andrews (who left with his successor Jacinta Allan) imposed a flat annual land tax of $975 on investors in a bid to pay off $31.5 billion of Covid debt.
Unusually, Victorian house prices have retreated even though the state’s population growth rate of 2.4 per cent over the last financial year was actually stronger than Queensland’s 2.3 per cent level.
Queensland receives a large influx of interstate migration, while Victoria is more reliant on overseas arrivals.
“As more people move to Queensland, driven by a more affordable cost of living and lifestyle benefits, 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 is not experiencing a large exodus of local residents to other states in search of cheaper housing.
On the property front, that means Victoria’s property market remains strong for owner-occupier mortgages as investors continue to pursue capital growth in Queensland.
But Brisbane has a much lower rental vacancy rate of 1.1 per cent, compared to Melbourne’s 2 per cent level, and data from SQM Research highlights how Queensland is a more attractive place to be a landlord.
“As tax changes drive investors out of Victoria and affordable, high-yield opportunities emerge in Queensland, the Sunshine State is likely to continue to gain momentum in the coming years,” Warren said.
When it comes to economic 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 unemployment level of Queensland and New South Wales .