‘We’re going backwards’: Victoria’s housing strategy under threat as property confidence hits record low

New data has revealed confidence in the state’s property industry has plunged to its lowest ever level outside the pandemic, prompting warnings the industry could soon come grinding to a halt.

The Allan government’s signature housing statement is under threat with confidence in the Victorian property industry plunging to the lowest level in the country.

New data shows confidence has plummeted to its lowest-ever level outside the pandemic, prompting warnings the state’s property industry is at risk of grinding to a halt.

Without government intervention, it would push Victorian house prices even higher and put supply under even greater pressure, experts say.

The latest quarterly sentiment survey by Procore and Property Council shows industry confidence had dropped to levels not seen since September 2020, during the Covid-19 pandemic.

Confidence in the Victorian property industry has plummeted to its lowest-ever level outside the pandemic. Picture: David Crosling

The survey, of more than 500 property insiders, puts Victoria’s Confidence Index fell at 90 — 10 points below neutral — compared to a national figure of 106.

The state’s forward work expectation over the next 12 months also dropped to 0.9 compared to 19 in NSW, 21 in Queensland, and 24 in South Australia.

Economic growth expectations were also the worst in the country, while confidence in the Allan government was the lowest after Queensland.

There are now expectations investors will turn to other states to take advantage of better tax incentives and building conditions.

The government has set a target of 800,000 homes being built over a decade to deal with the current supply crisis, a massive increase on current levels.

It has also set a new residences target of 2.5 million over the next 30 years.

Experts have cast doubt on the ability of the government to deliver on either target.

Experts have cast doubt on the ability of the Allan government to deliver its property development targets. Picture: Valeriu Campan

The Property Council’s Victorian Deputy Executive Director Andrew Lowcock said the results for Victoria were a serious cause for concern.

“The industry is anticipating very few new project commencements over the next year – with critical implications for new supply and affordability,” he said.

“The taxation and investment environment in Victoria is making it increasingly difficult for our members to obtain the financing to get projects out of the ground.

“At the exact time we need to be accelerating progress toward our ambitious housing targets, we’re going backwards instead.”

Mr Lowcock said industry expectation for economic growth in Victoria was now 37 index points below its average, and 58 index points below Western Australia.

“Our property professionals are now viewing market conditions in the same way they did during the middle of the state’s lockdowns,” he said.

“This should be an urgent wake up call for Victorian policymakers that a quicker and deeper response to the housing crisis is required, which needs to start with taxation incentives and relief that stimulates both supply and demand.

“Without action, the investment needed for new homes will not come to Victoria, but head to other parts of the country instead.”

Australian Bureau of Statistics data released on Wednesday showed total dwelling approvals rose in all states, however approvals for private sector houses fell 3.4 per cent in Victoria, the biggest decrease of all states.

Shadow Minister for Planning, James Newbury, said the state government’s “tax assault” had severe consequences for the property sector.

“Hundreds of businesses have confirmed that the Victorian property industry is now in crisis,” he said.

“Confidence in the sector is at a historic low, not seen since the middle of Covid lockdowns, when the industry was shut down.

“The Premier can no longer ignore how damaged the industry is and how few new homes are projected to be built.”

Responding to the survey a government spokesperson said: “Whether it’s streamlining our approvals process or announcing draft targets for every council in the state – we’re giving industry the confidence they need to get on and build”.

Originally published as ‘We’re going backwards’: Victoria’s housing strategy under threat as property confidence hits record low