‘Problem, what problem?’ Developer Max Beck talks up Melbourne market
Rich Lister and developer Max Beck has talked up Melbourne’s real estate prospects, putting him at odds with his own industry and its concerns that the state’s heavy reliance on property taxes will choke off the supply of new homes.
Beck’s upbeat views came at a property industry forum just two days after the state Labor government handed down a budget that will generate 47 per cent of its total tax take from real estate, making it the nation’s highest-property-taxing jurisdiction.
But Beck, who is close to former premier Dan Andrews, championed Melbourne’s real estate, noting its median home price was significantly lower than Sydney’s. Melbourne’s median is $786,158 while Sydney’s is $1.19 million, according to Cotality research.
“Melbourne, you can buy a house here cheaper than Sydney. We’ve got so many pluses here … we’ll be fine,” Beck told the Australia-Israel Chamber of Commerce Property Forum on Thursday.
“People talk about land tax, I’ve got a couple of properties around the place,” he said.
“Seriously, there’s bloody land tax in New South Wales, the Goldy [Gold Coast], I’ve got a couple of houses up there. There’s land tax up there. I mean, it’s all bullshit from Murdoch [newspapers].”
That sanguine view puts Beck at odds with many in his industry, including most immediately with his fellow panellist Shane Quinn, who leads boutique fund manager Quintessential.
Quinn told the forum no one would disagree that Victoria’s property market was “hard” for property developers and investors alike, and would be difficult for a long time.
“I think Melbourne has so much pain to go … they’ve just taxed us out of it,” Quinn said. “I truly believe that it’s seven to 10 years away from wanting to really invest.
“Offshore capital has an acronym ‘Anywhere But Melbourne’ [ABM] so that’s pretty ordinary.”
Quinn painted a grim outlook for the property sector with the likelihood of another Labor term in office.
“I think we’re going to get another Labor government, whether you like it or not, and so the spending until we blow up is not going to stop and that’s taxing us out of property,” he said.
Nerida Conisbee, chief economist at Ray White, told the forum that residential property markets across the country were incredibly challenged, especially for developers, but Melbourne was the worst.
“We know that the Melbourne market is the softest at this point,” Conisbee said. “There’s a lot of challenges in place. Developers are finding it tough to get everything out of the ground.”
Conisbee said the federal government’s ambitious target of building 1.2 million new homes nationally by mid-2029 was unlikely to be achieved, especially given construction costs in Melbourne are up 30 to 40 per cent, and have risen 50 to 60 per cent in Brisbane.
“Margins have been squeezed … we don’t even have the construction capacity to build that many,” she said. “So it’s going to be a really long, hard road to get meaningful levels of supply into the market and it won’t be a quick fix. And it will be something that really underpins the price growth that we’re seeing for established homes.”
