VIC State Budget 2022/23 – Property & infrastructure
The Victorian Government has continued its emphasis on infrastructure investment in this Budget with a focus on schools, health facilities and social and affordable housing.
New infrastructure spending:
- $1.6bn for construction and development of new schools and school upgrades
- $1.6bn for construction and development of new hospitals, health facilities and related upgrades
- $2.6bn investment over 4 years in the Commonwealth Games 2026 which includes funding for building and upgrading sporting venues and related supporting infrastructure
- $991m investment in improving Victoria’s roads and rail
- $1bn to fund low interest loans for community housing agencies to deliver social and affordable housing.
Key continuing initiatives from prior Budget announcements:
- Victoria’s Big Build: an average $21.3bn a year over the budget and forward estimates, reflecting the continuation of major productivity-enhancing projects such as the North East Link, the Metro Tunnel, the West Gate Tunnel, the Melbourne Airport Rail, the Geelong Fast Rail, the Suburban Rail Loop and the removal of 85 level crossings by 2025
- $6bn Big Housing Build package – continued investment in new social and affordable homes
- Stamp duty concessions and exemptions for residential property transactions, particularly homeowners
- Victoria’s HomeBuyer Fund of $500m, expanding the HomesVic Shared Equity Initiative by contributing equity to the purchase price for eligible first home buyers
- Continued concessions to eligible BTR developments – a 50% land tax concession for up to 30 years and a full exemption from Absentee Owner Surcharge over the same period.
For all key takeaways of the Victorian State Budget 2022/23 see here.
- Continued focus on infrastructure spending; the 2022-23 Budget provides $22.2bn in output spending and invests $6.7bn in new and improved assets. Investment in hospitals, rail and roads, social and affordable homes will continue to provide opportunities for property sector professionals and contractors
- Wage growth and increased household income will continue to drive demand for residential housing
- Continued stamp duty concessions, coupled with the HomeBuyer Fund funding is also likely to support the demand for residential housing. These initiatives may also mitigate any settlement risk for developer
- Ongoing Build-To-Rent concessions will continue supporting new entrants into that market
- Constraints on construction labour and materials may increase demand and investment in new property technologies aimed at delivering efficiencies in output
- There are no new taxes introduced impacting property purchasers and owners.
Did the VIC Budget measure up to expectations?
There are no new tax relief measures introduced for Victorian property purchasers, developers nor landowners. The constraints on residential and non-residential construction output, such as ongoing shortages of construction materials and labour shortages are also acknowledged but not addressed by any direct Budget initiatives.
The increases in costs of construction will be driven by projected wage growth of minimum 2.75% in the construction industry. This coupled with increase in cost of construction materials, also due to shortages, will continue to increase the price of newly constructed property.
While there are tax measures aimed at providing relief to homeowners (potentially neutralised by today’s interest rate hike) there is little relief provided in the Budget for the rest of the property sector participants such as property investors and developers.
Please reach out to one of our experts below for assistance navigating the implications and opportunities this Budget presents for you, your business and your industry.