By Jack Nevile
The year is almost at an end and the market entering what is usually its slower holiday period. But with property taxes levied on 1 January, including the increased land tax, the absentee owner tax, the vacant residential land tax, and the short stay levy, we may not see the same slowdown that we usually do – it can be quite expensive to wait until next year! If your property is on the market, calculate what taxes you’ll pay to hold it over Christmas – it might be cheaper to accept a slightly lower offer now, than a slightly higher offer in January. Since 1 January 2024, land taxes can no longer be passed on to purchasers.
To encourage new housing, the off-the-plan stamp duty concession has been extended to all buyers regardless of price or whether you’re an occupier/investor. It may mean a lot more townhouses in particular, which are usually priced above the old threshold. If you’re in the market for something off-the-plan, get in quick because this discount will only last for 12 months.
Changes to the Rental Tenancies Act have again been announced, protecting tenants and scrutinising landlords more closely. Lease breaking in particular will have financial penalties capped to 4 weeks’ rent, evidence will be required for any claims on the bond, rent-tech apps will no longer be able to charge tenants fees (long overdue, in my view) and when the draft legislation comes out, we’ll be having a close look to see what else they tuck in there.
Melbourne prices continue to lag and are now cheaper than every other capital except Darwin and Hobart. Sydney, previously flying high, has started to edge lower as well. If you owned a home worth $1m, here’s the dollar difference over the past 12 months:
(via @rabbit_wealth on Twitter)
Many wonder if the Americans, Kiwis and Canadians are cutting rates, why aren’t we? They’re cutting from 5.5%, whereas ours topped out at only 4.35%, still well below theirs. Australian inflation is expected to be second highest in the developed world in 2025. The bond market is having second thoughts about whether those cuts are really in the bag, with the 10-year yield going from 3.7% in September to 4.5% today.
Gross rental yields are about the same 4.5% level on units, with houses about 2.6% and presumably pricing in capital gain to make up the difference. While money in the bank doesn’t have outgoings, maintenance, rates, manager fees, or leaky taps, the number of properties on the market is basically unchanged over the past 6 years. So obviously there are a lot of owners receiving the rental yield and feeling pretty happy to sit tight.
General consensus, judging solely from the industry conferences we attend, is that Melbourne property is more affordable than in previous years, which is great news for young Victorians. The handouts and discounts the government is lavishing means that the lower end of the market hasn’t seen significant declines. Some of my clients are buying their landlord’s property because after factoring in the 25% the government will lend (interest free, in exchange for 25% equity), the mortgage payments are cheaper than rent! Prices remain quite strong in the middle ring suburbs too.
Almost everybody who wants a job has one, and wages continue to be strong. The Queensland election has shown that handouts win votes, so expect some bread and circuses in 2025, with the Victorian election in 2026. With Melbourne comparably cheap to the rest of the country, immigration still on full throttle, and asset prices in general starting to take off, it would be a brave person who bet against the market in 2025. But then again, the Victorian Government might have a few more taxes up its sleeve, and the full effect of the already-legislated ones won’t appear on land tax bills until March. Time will tell!
If you’re looking at buying a property, selling a property, or anything in between, contact Jack Nevile at jack.nevile@nevile.com.au.
Disclaimer: This publication contains comments of a general and introductory nature only and is provided as an information service. It is not intended to be relied upon as, nor is it a substitute for specific professional legal advice. You should always speak to us and obtain legal advice before taking any action relating to matters raised in this publication.
