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Budget Fix Needed For Victoria’s Capital Crisis

The upcoming Victorian Budget will be one of the most important in recent years, especially in tackling the many challenges Melbourne and regional Victoria face.


The state’s growing housing shortage and affordability crisis remains one of the most critical areas requiring urgent attention from all levels of government, particularly the state government.


Ensuring that the new housing supply can be delivered as quickly as possible is a key part of the solution.


Unfortunately, current policy settings are unlikely to achieve this and are, instead, driving an increasing number of the property industry to look outside Victoria for opportunities.


At Oliver Hume, we deal with a diverse range of stakeholders across the property industry. 


While some operate only in Victoria, many operate in more than one jurisdiction. 


An increasing number, however, are looking to shift capital, jobs and ideas to more welcoming jurisdictions with Victoria, for a range of reasons, not seen as ‘business friendly.’


As one developer recently told us: “Capital moves fast and will go elsewhere. As you know, we are now operating more in Queensland and South Australia.”


While there is no doubt all levels of government in Australia, including all state and territory governments, could improve, it appears that Victoria is increasingly seen as an outlier.


In contrast, some smaller jurisdictions – including South Australia, Queensland and Western Australia – appear increasingly better positioned to attract property development and capital.


Of note is South Australia, which continues to attract the attention of residential property and other developers, including in the greenfield sector, and where Oliver Hume continues to expand its presence.


In contrast, the Victorian State Government has sent a message that it will not be as welcoming of residential greenfield development investment as has previously been the case.


In effect, some development capital, which would have gone into the residential greenfield market, is looking at interstate opportunities.


This is occurring at a time when we are experiencing an unprecedented housing crisis, especially in the more affordable market segment.


Moreover, greenfield development could fulfil an urgent need for more housing given that detached housing supply is generally quicker to respond to market demand pressures than other forms of housing.


The State Government’s latest population projections, Victoria in Future 2023 (VIF2023), suggest that the state will continue to experience robust population growth over the coming decades, with the state’s population expected to reach 10.3 million by 2051 (up from around 7 million in 2024).


Indeed, Victoria’s population is expected to remain the fastest-growing of any state in the country.


If we are to accommodate even a portion of this future population growth, let alone all the projected increase, the state will continue to need significant levels of investment to fund the growth in the housing stock.


Put simply, investment will be needed to ensure we can continue to be productive while also maintaining a high standard of living.


However, if we want to continue attracting investment into Victoria, we need the State Government to implement policies that demonstrate Victoria is open for business.


The State Budget, due on May 7, should seek to ensure Victoria is an attractive place to do business. 


By Julian Coppini

Oliver Hume

CEO Project Marketing 

Tags: Research