Melbourne housing affordability: Most undersupplied markets revealed, calls to reform on ‘investor-bashing’ policies
Nov 2023Karen Millers
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Almost half of Melbourne’s most undersupplied housing and rental markets are in the city’s east.
New research from data-led buyer’s agency InvestorKit has revealed the postcodes across Victoria with the highest-growing demand and worst shortages in both rental and housing supply amid calls for reforms on the state government’s “investor-bashing” policies.
It comes after PropTrack’s Housing Affordability Index released in September showed the state’s housing affordability had reached its lowest level in more than three decades, while the rental vacancy rate plummeted to a record low of 1.07 per cent in October.
InvestorKit’s data shows areas in Melbourne’s east including Heathmont, Mooroolbark, Croydon North and Scoresby were all among the most undersupplied markets in the city.
Founder and head of research Arjun Paliwal said Victoria’s “investor-bashing policies” were scaring property investors away, leading to less available rental homes and as a result, higher competition among renters and worsening affordability.
“Victoria already has the highest stamp duty rate in the nation,” Mr Paliwal said.
“The government’s decision to increase land tax over the next 10 years will only make the situation worse — we’ve already seen the consequences.”
OBrien Real Estate Blackburn auctioneer Anthony Molinaro echoed that new investment property taxes introduced this year were “double-edged swords’.
“Investors are realising the money they’re getting isn’t covering their repayments and capital growth has started to slow down, so they’re getting out of the market and most of those properties are going to owner-occupiers instead of renters,” Mr Molinaro said.
He added that state government first-home buyer policies such as the Victorian Homebuyer Fund, where buyers can enter the market with as little as a 5 per cent deposit, were also contributing to supply issues by increasing the number of purchasers in the market.
“These are bandaid approaches,” the auctioneer said.
The agency’s property manager Anna Molinaro added that the lack of housing supply was noticeably hurting renters in the eastern suburbs, with many copping $100 a week increases to keep a roof over their heads.
“With the ever increasing interest rates, a lot of those renters are people who thought they would be in a position to purchase but are going to do another year of renting instead,” Ms Molinaro said.
“There’s a lot of lack of supply at the moment and we have a lot of renters on the market looking to lease properties but we don’t have enough to offer. We still have renters offering to pay higher than advertised prices and trying to negotiate due to the competition.”
The recently released Victorian Housing Statement has flagged plans to fine agents and landlords who accept rental bidding. While this hasn’t come into effect, it is currently illegal to solicit rental bids in Victoria.
Other suburbs where buyers and renters are feeling the pinch of low stock levels include Mulgrave in the southeast with a median house price of $1.04m, and in the northeast, Rosanna and Macleod — where the typical house costs $1.2m and $1,136,500, respectively.
Mr Paliwal added that Melbourne was now a “second-last choice” as an investment destination among capital cities, according to a Property Investment Professionals of Australia (PIPA) survey.
He said a decline in investors would also lead to lower stock mobility.
“Owner-occupiers tend to hold stock longer than investors, leading to less available supply in the long term, ultimately hurting housing affordability,” he said.
10 MOST UNDERSUPPLIED HOUSING MARKETS
1. Heathmont
2. Mulgrave
3. Mooroolbark
4. Rosanna
5. Croydon North
6. MacLeod
7. Oakleigh South
8. Scoresby
9. Oak Park
10. Gladstone Park
Originally Published: Emily Hogate | News.com.au | 24 November 2023
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