Property tax worries reached record highs in the latest industry survey, with Victoria leading concerns. At the same time, home prices posted nine straight months of gains, supported by stable rates.
Industry confidence in the property sector remained stable in the September quarter, with the Procore/Property Council survey of 935 members holding at an index of 124 (where 100 is neutral).
While housing supply and affordability remain the top national issue (32%), concern over tax reform has surged, with 22% now nominating it as their key concern – the highest level since the survey began in 2019.
At the state level, 32% of respondents ranked property taxes and charges as the top issue for governments, surpassing housing supply and affordability (29%). In Victoria, concern was even sharper, with 63% naming it the state government’s biggest issue.
The concerns come as homeowners enjoy a spring surge, with PropTrack reporting national home prices rose 0.5% in September – the ninth straight month of gains – lifting values 6.2% over the year. The Reserve Bank also kept the cash rate on hold at 3.6%, a move expected to bolster buyer confidence.
Property Council chief executive Mike Zorbas (pictured) warned that rising taxes are undermining investment and affordability.
“New home buyers are being slugged with a shocking tax burden. Thirty per cent of a new home’s purchase price goes in government taxes, only a fraction of which end up as community infrastructure,” Zorbas said in a media release.
“Add the extra taxes on institutional investment in apartments, build-to-rent, student accommodation and retirement living, and it almost looks like state governments don’t want new homes to be built.”
He added that while planning assessment reforms are underway, tax settings remain a growing drag on the market.
Despite industry concerns, optimism around property prices is strong. Expectations for residential house price growth reached an index score of 62.1 – well above the long-term average of 15.9 and the highest since mid-2021.
The outlook for housing construction also strengthened, rising to 39 on the index, the strongest since December 2021.
“There is cautious optimism for the residential sector,” Zorbas said. “The National Housing Accord has spurred a large effort from governments to boost housing supply, and that should be welcomed. However, the reality is that we are behind our targets and without more effort, we won’t bridge that gap.”
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