Key takeaways
Victoria has announced targeted relief from its Absentee Owner Surcharge for eligible developments, rather than a blanket abolition of foreign investor taxes.
Encouraging overseas capital into housing development could help projects proceed and support jobs and rental supply.
The broader opportunity is rebuilding confidence in Victoria as a place to invest, although implementation and policy certainty will matter.
For property investors, this is an encouraging development that reinforces the importance of selecting quality assets with long-term demand.
After years of property investors feeling that Victoria sees them as an easy source of extra revenue, there is finally an encouraging change in direction.
The Victorian Government has announced plans to ease the Absentee Owner Surcharge for eligible developments, recognising that attracting investment can help get more homes built.
Introduced in 2016, the surcharge adds an extra 4 per cent fee for foreign investors who do not reside in Victoria, and the government will slash it to attract investment back to the state.
In my opinion, this is a welcome and overdue acknowledgement of how housing actually gets delivered.
Every new development needs someone willing to commit capital, accept risk and wait for a return and government policy has a substantial influence on whether that money comes to Victoria or goes elsewhere.
What Victoria has announced
The government's recent announcement outlines changes to the Absentee Owner Surcharge exemption guidelines.
Developers meeting the Development Facilitation Program's criteria would be exempt during construction, while eligible residential developments could receive an exemption for up to two years after completion, allowing more time to sell or lease their stock.
The announcement also includes formalising a one-year exemption following construction for the sale of land, regardless of its type.
These are targeted changes to the surcharge, and the announcement should be understood as proposed relief with eligibility requirements, rather than as an across-the-board removal of foreign investor taxes.
That distinction matters for developers assessing a project's costs, but the direction is encouraging: the government is acknowledging the connection between tax settings, investment decisions and housing supply.
Why attracting foreign capital helps Australians
Debates about foreign investment often focus on overseas buyers competing for existing homes, overlooking the role that international capital can play in financing new housing.
A foreign institution partnering with an Australian developer can help fund a project that ultimately provides homes for Australians to buy or rent, as well as jobs for local builders, tradespeople and suppliers.
There is a practical reason to welcome that investment: a development with planning approval still needs finance, sufficient demand and a viable margin before construction can begin.
Reducing an ongoing tax burden can improve those numbers, particularly when developers are holding completed stock while arranging sales or leases.
- Also read:This week’s Australian Property Market Update – Latest Data, State by State October 20th 2026
- Also read:Latest Property Price Forecasts. Australian Property Market Outlook 2026-2027: Navigating a Market Correction
- Also read:Everything you need to know about the state of Australia’s property markets in 20 charts – October2026
- Also read:Adelaide housing market update | October 2026
- Also read:National Weekly Auction Report – October 17th 2026 | Mid-Spring Auction Markets Remain Subdued
Of course, construction costs, finance conditions and delivery risks still have to stack up, but removing an avoidable obstacle gives a viable project a better chance of proceeding.
Victoria has been competing for mobile money
International investors have choices about where to put their money, and Victoria has to earn their confidence alongside other states and overseas markets.
In October 2025, the Property Council of Australia released Mandala Partners’ research, which reported that global investment in Victorian property had fallen by 53 per cent over three years, from more than $10 billion to around $5 billion.
The research covered institutional investment in commercial property and large-scale residential developments, so those figures should not be interpreted as a measure of individual foreign home purchases.
The same industry-commissioned modelling estimated that reducing the surcharge could attract an additional $5.7 billion in Victorian investment by 2030.
That estimate relates to a broader reform scenario and should not be presented as money guaranteed to flow from this narrower announcement. However, it helps explain why the industry has been pressing for change.
My view is that governments should pay close attention when investors start excluding a state from consideration, because the consequences extend to projects, employment and future housing supply.
Of course, Victorian voters are going to the polls in November, and a change of government could follow, with the Liberal Party more likely to take a commercial approach to property investment.
What this means for property investors
I have been critical of policies that make providing housing less attractive, so I welcome a move that recognises the value of investment in delivering more homes.
Victoria now has an opportunity to turn that change in direction into practical results through clear eligibility rules, timely implementation and greater certainty for those committing capital.
For long-term investors, that is a reason to keep assessing Melbourne's opportunities carefully and with an open mind.
If you would like to understand how those opportunities fit your circumstances, click here now and speak with a Metropole Wealth Strategist about developing a Strategic Property Plan that considers your financial position, borrowing capacity and goals.
The aim is to make a well-informed purchase you can comfortably hold through changing markets while building wealth over time.
