According to
realestate.com.au, one of the nation's most powerful building groups has produced new forecasting showing Victoria will fall 36,000 homes short of its housing target, with a federal budget tax measure identified as a key factor worsening the shortfall.
The Building Industry's Warning
The forecasting, attributed to a major building group and reported by realestate.com.au, lands at a sensitive moment for Victoria's housing supply pipeline, which has been identified as among those most at risk of missing its share of the National Housing Accord target, and this latest projection puts a hard number on the gap: 36,000 dwellings. The report frames a federal budget tax change as a direct contributor to the blowout, rather than state-level planning delays alone being to blame.
For Victorian buyers and renters, the practical consequence of a 36,000-home gap is straightforward: less competition-dampening supply will reach the market over the Accord period than was assumed when the target was set. Investors weighing new Victorian stock, whether built-form apartments or house-and-land packages, should treat this forecasting as a signal that completion timelines on marketed projects may slip further, and that fewer new listings will compete with established dwellings for buyer attention.
Why Federal Tax Settings Now Cut Into State Supply
The realestate.com.au report positions the federal budget tax hit as compounding — not replacing — the state-based pressures that have already made Victoria one of the hardest places in the country to build. Stamp duty, land tax surcharges on investment and foreign-owned property, and the state's windfall gains tax on rezoned land have all been cited in previous building industry commentary as handbrakes on new supply. A federal measure stacking on top of that effectively narrows the number of projects that still make commercial sense to launch.
This is a mechanism worth being precise about. Developers assess every site against a feasibility model that nets out acquisition cost, construction cost, financing cost, and taxes against expected sale revenue. Each additional tax layer — state or federal — shifts that model toward the margin where a project no longer clears its hurdle rate. When enough marginal projects fall below that line simultaneously, as the building group's forecasting implies is happening in Victoria, the effect shows up in approvals and completions data only after a delay, not immediately.
Borrowers and property investors tracking the broader interest rate backdrop should note that mortgage pricing dynamics are shifting in parallel — lenders including CBA and Westpac have followed Macquarie in lifting variable mortgage rates even as the RBA cash rate holds at 4.60%, a trend explored in more detail via WealthWatchPro's macro analysis. Higher borrowing costs on top of a federal tax hit to developer feasibility create a double constraint on new Victorian supply reaching settlement.
Background: How Property Taxes Already Shape Supply
Australia's property tax settings — stamp duty, land tax, capital gains tax and depreciation rules — interact in ways that directly influence whether new housing gets built, held, or sold. For a full breakdown of how these levers work together and what investors need to track at both state and federal level, see our Australian Property Tax Guide. Victoria's current predicament is a live case study in how a federal tax change can erode state-level supply ambitions even when state planning reforms are moving in a supportive direction.
Investors should also consider how holding structure interacts with these settings. The choice between a house and an apartment, for instance, carries different depreciation and running-cost profiles that are explained in our house vs apartment comparison, while those claiming deductions on investment property should review our depreciation schedules guide to ensure they are maximising legitimate claims against a tax environment that is clearly tightening around new supply.
What This Means for Buyers, Investors and Developers
For prospective buyers in Victoria, a confirmed 36,000-home shortfall against target reduces the likelihood that new supply will meaningfully ease price pressure in established suburbs over the medium term. Buyers who had been waiting for a wave of new completions to soften competition should reassess that assumption and treat current established-dwelling pricing as more durable than previously modelled.
For developers and investors assessing Victorian sites, the federal tax hit identified in the building group's forecasting is a reminder to re-run feasibility numbers with updated tax assumptions before committing capital. Projects that previously cleared a hurdle rate may no longer do so once the full combined weight of state land tax, stamp duty and the new federal measure is applied. Those holding land banks awaiting rezoning should factor this tighter margin environment into timing decisions.
Renters and tenants in Victoria are the group most exposed to the consequences of a supply shortfall of this scale. With fewer new dwellings reaching completion than the Accord target assumed, rental vacancy is likely to stay tight for longer, reinforcing the rent growth pressures that have already been building across the state. Anyone exposed to Victorian investment property should revisit their tax position now, using the full suite of deduction and structuring strategies available, rather than waiting for policy clarity that may not arrive before the next budget cycle.
Ultimately, this forecasting turns an abstract policy debate into a concrete number — 36,000 homes — that property professionals, lenders and state planners will now be forced to reckon with. Whether federal settings are adjusted in response, or Victoria is left to close the gap through state-level concessions alone, will shape investment decisions across the sector for the remainder of this housing cycle.
This article was produced with AI assistance and reviewed for accuracy. Content is for informational purposes only and does not constitute financial or property investment advice.
