New data reveals investment property purchases in Warrnambool are steadily rising, amid an ongoing rental crisis.
In 2016, 3459 Warrnambool properties were subject to the state government's land tax, while that increased to 3686 properties in 2020.
There are 15,544 residential dwellings in Warrnambool.
Landowners do not pay the tax for primary residences, but do for investment properties, holiday houses, commercial properties or even vacant land. Only property portfolios worth more than $250,000 are taxed.
Brian O'Halloran & Co's Brian Hancock said he believed the city's property market was made up of about 18 per cent investors, increasing from about 12 per cent of property owners a decade ago.
"We have people buying properties here who can't afford to get into the market in Melbourne, and they want to live where they live, so they are happy to pay rent and be subsidised with the purchase of a property here," Mr Hancock said.
"We are getting strong competition from outside of the area."
Mr Hancock said relieving competition for renters was not just up the private sector investors but could be improved with more social housing.
"There's a huge mix of housing required. But if it continues on this pattern it's pushing rental prices up," he said.
Harris & Wood Real Estate's Danny Harris said he was not surprised more in the city were paying the tax, but believed it could also be a contributor to keeping investor numbers low.
"There is a chronic shortage of rental properties in the market," Mr Harris said. "It's a tax that is not encouraging investors to go and create that housing for people. It has the opposite effect."
He said taxing people with property portfolios greater than $250,000 was too low.
"The people who own those properties and have worked hard to do that don't necessarily qualify as wealthy people," he said.
"They are the people who have taken the risk to borrow the money, it's only right there should be some reward. The threshold should be a lot higher."
John Ryan, of John Ryan's Real Estate, said inquiry from out-of-town buyers had increased 15 per cent since the coronavirus pandemic.
He questioned whether regional people were benefiting from the land tax, and also said it could be a disincentive for investors.
"The statutory charges are quite significant for people acquiring their first property or an investment property, without people investing into property it makes the rental market more difficult for people wanting to rent."
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