- Victoria update
2015 was a year of several economic challenges for industry participants, such as another change in leadership at the Federal Government level, volatile global markets (particularly China) and a falling Australian dollar.
We also saw several changes to regulations that may have significant future impacts, most notably the introduction of new foreign investor taxes that were ignored by other state and territory governments.
As we look forward to what 2016 may hold, we see several positive indicators for the Victorian RE&C industry:
- Interest rates are expected to remain at or near their same low levels
- The decrease in the Australian dollar provides further incentive for foreign buyers to invest in property in Australia
- Housing affordability concerns will ease, with low growth expected in sale prices. Rental growth is also expected to be lower than recent years
- Although slowing, population growth, a major driver of new housing activity, remains strong in Victoria. Despite the slowdown, our growth rate of 1.7 per cent was much faster than national growth of 1.4 per cent, and faster than growth in any other state or territory
- While the number of housing starts are forecast to drop against the record levels observed in 2015, the long-term population growth means that levels will remain strong in the foreseeable future
- Despite the recent volatility in Chinese markets, a recent survey by the Asian Association for Investors in Non-Listed Real Estate Vehicles (ANREV) showed that foreign investment is expected to remain consistent with 2015. Long term, we should see more foreign investment in office and commercial property, with interest in residential property remaining steady.
While the state of the industry remains positive for the near future, there are several issues that we expect to continue in 2016, such as:
- The unfair burden that the Victorian property industry bears in supporting the Victorian budget. We hope to see some serious discussion around tax reform at the next budget, in particular stamp duty, and whether Victoria can or will follow South Australia’s lead in reducing this industry impost
- The continued prevalence of fraud within the RE&C industry
- Disruptive technologies and how these may impact traditional means of doing business in the RE&C industry.
In addition, both locally and nationally, we’ll watch closely to see if Chinese capital controls impact the flow of outbound capital to the Australian property market.