Regional pain as rental housing drops for first time in 25 years

The data from the government's Homes Victoria site revealed a 2.3 per cent decline statewide - a loss of 15,600 properties - with Melbourne and the regions suffering similar drops.

The data suggested the exodus of landlords was accelerating, with more than 10,000 rentals lost in the first three months of 2024.

The state opposition has blamed the drop on the government's suite of 2023 taxes pushing property investors out of the Victorian market.

But Treasurer Tim Pallas denied there was any reduction in investment and said the taxes had no effect on the rental market.

When a renter leases a property in Victoria, the bond is lodged with the Rental Tenancies Bond Authority.

Regional Victoria saw a widespread decline in active bonds, meaning the number of available rentals declined.

All but four of the state's 48 regional council areas either dropped or held steady over the past year.

Greater Bendigo saw a 2.7 per cent drop over the past 12 months. Nearby Loddon Shire dropped 4.4 per cent, while Campaspe Shire sank 3.2 per cent.

Wodonga suffered a fall of 2.9 per cent, with nearby Indigo and Moira shires almost holding steady at -0.4 and -0.7 per cent for the year. But Towong Shire to the east saw a 9.5 per cent decline, effectively losing one in 10 of its rentals .

Ballarat was one of the few areas in the state that didn't decline, recording a 0.3 per cent increase. Nearby Hepburn Shire showed the same modest rise, but Pyrenees Shire and Central Goldfields Shire lost 3.4 and 2.8 per cent of their rentals.

Moorabool Shire also recorded a 0.8 per cent drop in available rentals despite being the fourth most popular spot in Australia for regional migration.

Warrnambool's rental availability dropped nearly 2 per cent for the year and 10 per cent over the past five years.

Nearby Moyne Shire sank 2.9 per cent, while Corangamite Shire to the east plummeted 5.3 per cent. All three council areas have struggled to recruit employees to key local industries because of a lack of available accommodation.

Two local government areas to buck the downward trend were Golden Plains and Surf Coast shires, with spiked 16.3 per cent and 23.8 per cent as they absorbed growth from Geelong.

The general decline in rentals pushed average prices up across the board.

For three-bedroom houses in regional Victoria, the annual median rent rose in every single town except Ocean Grove-Barwon Heads - where it dropped 3.6 per cent - and Benalla, Hamilton and Wangaratta, where it remained stable.

The biggest spikes were in Horsham (11.1 per cent), Swan Hill (11.1 per cent), Warrnambool (11.1 per cent), Echuca (8.3 per cent), Seymour (8.1 per cent), Sebastopol-Delacombe (7.8 per cent), Shepparton (7.7 per cent), North Bendigo (7.5 per cent), Mildura (7.4 per cent), Bendigo (7.3 per cent) and Golden Square-Kangaroo Flat (7.3 per cent)

Warrnambool was the most expensive regional town outside the Geelong-Torquay area, with an average rent of $500 per week.

The state opposition has lashed the government over the decline in rental stock when Victoria was already facing a rental crisis.

Treasurer Tim Pallas targeted landowners in Victoria's 2023 budget to raise the revenue to pay off billions in debt racked up during the pandemic.

The centrepiece of his plan was a land tax on non-primary residences, which aimed to raise $4.7 billion.

The changes lowered the tax-free threshold for general land tax rates from $300,000 to $50,000.

Landholdings valued between $50,000 and $100,000 attracted a fixed $500 charge each year and those between $100,000 and $300,000 incurred a $975 charge.

Landholdings worth more than that were hit with increasing flat fees as well as a percentage of the land value.

Opposition housing affordability spokesman Evan Mulholland said Labor's policies had pushed investors out of the market.

"After years of tax increases and cost of living pressures, rental stock hasn't kept up with demand, driving prices up and hurting vulnerable Victorians the most," Mr Mulholland said.

Data released in June by the Australian Bureau of Statistics revealed only 30.6 per cent of housing loans in Victoria were taken out by investors, compared with 40.5 per cent in NSW and 37.6 in Queensland.

But Mr Pallas said the taxes weren't an issue.

"I see no evidence of a reduction in investment," he told the Public Accounts and Estimates Committee in May.

Mr Pallas said the taxes were "relatively marginal" and wouldn't be pushing rents up or causing investors to sell their properties.

ACM has spoken to many landlords who said the new costs were forcing them to reconsider holding on.

Opposition housing spokesman Richard Riordan said the taxes would keep pushing the number of rentals down.

"The people providing the most affordable and long-term accommodation in the rental market are generally not wealthy people," he said.

"The government simply haven't recognised who is providing long-term security of tenure in Victoria, because those are the people who are deserting the market."