Victorian Budget 2019-2020: Property outlook
The Victorian state budget was handed down this week, with Treasurer Tim Pallas delivering a $1 billion budget surplus and a bounty of investments across the region.
In 2017-18, Victoria’s economy grew by 3.5 per cent (besting a national average of 2.8 per cent). Property remains a critical contributor to the Victorian Budget, forecast to provide 46 per cent of revenue in the next financial year.
- Foreign investor duties rising to 8 per cent (2019)
- Absentee landowner tax rising to 2 per cent (2020)
- $25.8 billion to boost state transport
- Home solar rebates extended, now include renters
- Land tax and levy increases
Building for growth
Victoria’s construction sector is the fastest growing employer, driven in no small part by the swelling population across the state (a rate 50 per cent faster than the long-term average) New Victorians and interstate movers are behind the majority of growth, spearheading a forecast 2.75 per cent expansion in the state economy.
The Andrews Government has allocated $25.8 billion to transport investments that help connect residents around the state, including East Link and suburban rail.
Victoria is on track to accommodate one million students by 2020, and this year’s Budget commits $671 million to build 17 new schools to help house them (including the much anticipated Eynesbury Station Primary School).
For first home buyers in booming non-metro areas, this investment is a critical scaffold for the future.
Renters and owners alike will enjoy $1.3 billion over 10 years for the next phase of the state government’s Solar Homes Package.
The scheme partially offsets the cost of solar panels and hot water systems that can help with household energy efficiency and reduced carbon footprint. Homes boasting energy optimisation are typically favoured by owner-occupiers and investors.
Land tax & levies
To help offset a $5.2 billion shortfall in stamp duty over the next four years, some Victorian property owners will see their land taxes increase.
Current tax exemptions for vacant land attached to the family home will be scrapped (impacting approximately 1700 blocks of land in metropolitan Melbourne) and owners of Victoria’s 13,000 heritage-listed buildings will no longer be able to leverage this status to lower land tax owed.
Property Observer is reporting that the Victorian Government is also set to raise fire levies on all properties in 2019-20. They earmark a rise to $738 million in 2020-21.
International property investors will see a modest increase in costs, with the foreign investor duty set to rise from 7 per cent to 8 per cent from July 1, 2019.
The absentee owner tax will rise from 1.5 per cent to 2 per cent from January 1, 2020 and is expected to impact an estimated 3000 overseas property owners.
These moves bring Victoria in line with New South Wales measures and are unlikely to dampen long term international enthusiasm for the Australian market.