The government gives us a few reasons why Melbourne home prices will grow strongly


Recently the Victorian Government announced Homes for Victorians an initiative to make housing more affordable. Melbourne property skyline

However,  I found every time governments tinker with the property market or affordability they tend to push up property values – the exact opposite the result that they desire.

In this video update, Danni Addison Victorian CEO of  UDIA  talks about the broader economic impacts we can expect to play out in the Melbourne housing market over the next 3-5 years.

Amongst other things she warns that discouraging investors not a good move for housing affordability.

This is what the government plans:

Clearly fixing the affordability problem isn’t simple.

The government saysHomes for Victorians provides a co-ordinated approach across government, and across our state and includes:

  • abolishing stamp duty for first time buyers on homes up to $600,000 and cuts to stamp duty on homes valued up to $750,000 
  • doubling the First Home Owner Grant to $20,000 in Regional Victoria to make it easier for people to build and stay in their community
  • creating the opportunity for first home buyers to co-purchase their home with the Victorian Government
  • making long-term leases a reality
  • building and redeveloping more social housing – supporting vulnerable Victorians while creating thousands of extra jobs in the construction industry.

The UDIA’s thoughts on this:

In the video Ms Addison explains that there are three major unintended consequences of the Homes for Victorians strategy, each associated with skewing the supply/demand balance and therefore negatively impacting upon housing affordability.

  1. Impact on house prices: property
    The demand for houses in Melbourne’s growth areas and established suburbs will increase but supply will not, which will drive up house prices rather than making them more affordable.
  2. Impact on rental affordability:
    A decline in investors purchasing and leasing out new housing will limit rental supply and push up prices for renters.
  3. Impact on new housing supply:
    Removing stamp duty concessions for investors purchasing off-the-plan properties will decrease the supply of new housing, pushing up costs for home buyers.

What are your thoughts?

Leave your comments below.


Subscribe & don’t miss a single episode of Michael Yardney’s podcast

Hear Michael & a select panel of guest experts discuss property investment, success & money related topics. Subscribe now, whether you're on an Apple or Android handset.

Need help listening to Michael Yardney’s podcast from your phone or tablet?

We have created easy to follow instructions for you whether you're on iPhone / iPad or an Android device.


Prefer to subscribe via email?

Join Michael Yardney's inner circle of daily subscribers and get into the head of Australia's best property investment advisor and a wide team of leading property researchers and commentators.


Kate Forbes is a National Director Property Strategy at Metropole. She has 15 years of investment experience in financial markets in two continents, is qualified in multiple disciplines and is also a chartered financial analyst (CFA).
Visit Metropole Melbourne

'The government gives us a few reasons why Melbourne home prices will grow strongly' have no comments

Be the first to comment this post!

Would you like to share your thoughts?

Your email address will not be published.


Copyright © Michael Yardney’s Property Investment Update Important Information
Content Marketing by GridConcepts