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Policy decisions cost Victorian investors more than $100k
While the nation’s property market has soared in recent years, Victoria has underperformed the national average, prompting more investors to flee the state.
According to the Property Investment Council of Australia’s latest report, property owners in Melbourne have been financially disadvantaged compared to other capital city markets, largely due to the state’s policy decisions.
The data showed that while national dwelling values rose by 25.5 per cent between January 2022 and December 2025, Melbourne recorded only 3.5 per cent growth.
By comparison, Perth soared by 77 per cent over the period, while Adelaide and Brisbane grew by 54 per cent and 47 per cent, respectively.
Even the nation’s most expensive housing market, Sydney, grew by 16 per cent.
PICA chair Ben Kingsley said the data revealed one of the most dramatic performance gaps between capital cities.
“Melburnians who own property are being shortchanged by the current government to the tune of hundreds of thousands of dollars, and according to the government, they think it's fine because it’s making housing more affordable,” Kingsley said.
“If the state government continue to manipulate the market, these Melburnians will be significantly worse off financially compared to their counterparts from other states.”
The report found that if Melbourne’s growth rate had matched any of the other capitals, investors would have added hundreds of thousands of dollars in property value.
Had the city grown at the same rate as Perth, investors would have gained an additional $587,000 in value over the four-year stretch.
Compared to Sydney’s modest growth, investors had still foregone $98,000 in unrealised growth.
Over the four-year period, Victoria was considerably weaker in several economic metrics than the other states, including gross state product, unemployment, wage growth and state debt.
Victoria had the highest unemployment rate among the mainland states, the weakest Wage Price Index growth, and the most state debt in the nation.
The report identified several key factors that underpinned Melbourne’s poor performance, but pointed to the state’s policy decision as the critical differentiator.
It said the COVID Debt Levy, vacant land taxes, short-stay levies, and more than 150 rental reforms had played a significant role in dampening the property market, triggering increased selling activity and reduced demand to enter the market.
In 2024, the COVID Debt Levy was cut from $300,000 to just $50,000, bringing an estimated 360,000 new taxpayers into the system.
In comparison, the next-lowest land tax threshold is in Western Australia, with taxes kicking in at $300,000, which has seen significant capital investment that would previously have gone to Melbourne redirected to Perth, Adelaide and Brisbane.
The state also introduced a 7.5 per cent short-stay levy at the beginning of 2025, in addition to implementing extensive rental reform, which included banning no-fault evictions, rental bidding, and extending notice periods.
While other states implemented rental reforms, no other state combined rental regulation with the tax increases that Victoria imposed.
As part of the report, PICA called for Victoria to review its housing policy to restore confidence and encourage investment.
“Under the current state government’s approach, come retirement, when they go to downsize their property, they can kiss goodbye any financial windfall,” Kingsley concluded.
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