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Property taxation is the greatest factor hampering housing supply in regional Victoria, according to the Real Estate Institute of Victoria.
Property taxes restrict regional housing supply, real estate agents say
03 April 2025
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7 minute read
The Real Estate Institute of Victoria (REIV) has told the Victorian government that property taxes are restricting housing supply in regional Victoria in response to the inquiry into regional housing supply.
Real estate agents surveyed by REIV identified property taxation (77 per cent), high development costs (74 per cent), complex zoning processes (66 per cent) and inadequate infrastructure (37 per cent) as significant factors constraining housing supply in the regions.
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“The REIV has long advocated for taxation and regulatory reforms to boost and stabilise housing supply,” Kelly Ryan, chief executive of REIV, said.
Real estate professionals said that land tax had driven investor sell-offs, reduced rental stock and boosted rent prices for tenants, the submission noted.
“A detailed review of property taxation is overdue,” REIV said.
“It is critical that retail investors (mum and dad investors), who provide the majority of private rental properties, are supported and encouraged to retain properties on the long-term rental market.”
The submission also called for sustained and significant regulatory change in the residential rental market, saying that a balance must be struck between “renter protections” and “investment viability.”
REIV called for a more streamlined planning approval process and a reduction in the authority of councils to delay private developments.
Development bottlenecks often occured due to poor coordination between state and federal government funding, the submission noted.
Research by the Productivity Commission found that regulatory burdens had stifled productivity in the construction sector. Australian housing developments can take years to complete, with most of this time taken up by the approvals process rather than constructing homes.
Furthermore, the time it takes to complete a new dwelling has risen over the past decade. The average time to complete a single detached house was 10.4 months in 2023–24, compared to 6.4 months a decade earlier.
To ease approval bottlenecks and speed up the development process, the commission recommended that the government should improve coordination between regulatory decision makers.
“Policymakers must consider the drivers and inhibitors of initial housing development and construction, including the state’s planning, regulatory, and infrastructural settings,” REIV said.
“Broadly, reduced government intervention will bolster the critical housing supply that regional Victoria needs.”
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