Land-banking investors have swooped on large swathes of Victorian land, driving up prices and causing a shortage in land stock, according to developers.
Speaking at The Urban Developer’s Residential Development vSummit, Villawood executive director Rory Costelloe said developers should be “exempt” from the tax, while land-bankers who did not develop should pay the tax.
“A lot of the properties we’ve been trying to buy at the moment, they’ve already been optioned up by a speculator who is just trying to make a margin,” Costelloe said.
“There’s not many vendors trying to sell the original land at the moment. A lot of the stuff being thrown around is speculators trying to make a margin, which has buggered up the industry to a degree.”
Costelloe argued the windfall tax should focus on investors who do not deliver on a development of the rezoned land.
“I’d be pushing for—if you buy the land and develop it, you should be exempt from (the betterment tax),” he said.
“But if you buy the land and then just sell it to someone else then you’re the one who gets hit with a speculation tax.”
Costelloe said it was a very difficult market to buy into because speculators had “gone to every property around the periphery and made ridiculous offers to get their 10-year options”.
|Region||Supply||Median lot price|
|SE Queensland||1 month||$251,000|
Source: Research 4
Property Council of Australia’s Victorian executive director Danni Hunter has been vocal in her opposition to the windfall gain tax since it was announced in the Victorian budget last month
“The new, so-called ‘windfall gain’ is a different name for ‘tax on investment’,” she said.
“This tax on rezoning will bring to a halt development that for decades has delivered new homes and vibrant communities, and added to the liveability of Victoria.”
Other prominent developers, including Tim Gurner, have also said it would cause a slow down in the industry and the costs would be passed on to the consumer.
But Prosper advocacy director Karl Fitzgerald said the introduction of the windfall tax would provide stability to the Victorian housing market.
“Victorian residential land values increased by $135.6 billion in 2019-20 … even commercial property, which faced stronger headwinds during the pandemic, saw land values rise by $6.6 billion over the year,” he said.
“If we were to multiply such gains over four years, the property tax increases seem quite reasonable in light of such large returns.”
Fitzgerald said the higher land prices went, the more backstop the industry would need in a major crisis, and it was a good reminder of the impact the boom-bust nature of property had on society.
Research 4 director Colin Keane, who also spoke at The Urban Developer’s vSummit, said land supply in Victoria was down to about one month, with a median lot price of $314,000, while in Perth supply was at about three months, which had pushed prices down.
Keane said the greenfield market had benefited directly from “a huge spike in returning expats” and Australians not leaving the country. Net interstate migration had bolstered Queensland’s sales.