Coupled with the new short-stay tax, which came into effect on January 1 this year, investors are feeling the pinch.
The 7.5 per cent levy on short-stay rentals takes a Yarrawonga Airbnb at $850 to $913.75, as costs are passed on to holiday makers.
Local real estate agent Mark Seeliger said a lot of houses had come onto the market as a direct result of the land tax.
“To a property worth $2-3 million, that’s an extra $20-30,000 and that hurts,” Mr Seeliger said.
“In the end it’s the consumer that pays and more expensive accommodation means there’s less money being spent in the town.
“That directly impacts business and especially Mum and Dad businesses feel it.”
The increase in land tax for investment or secondary properties was further exacerbated by a drop in the tax-free threshold from $300,000 to $50,000.
Victoria has the highest property taxes in Australia including land tax, stamp duty, vacant residential land tax, absentee owner surcharge, foreign purchaser additional duty, the Federal Government’s capital gains tax, and council rates.
New South Wales has no short-stay tax and land tax only applies to properties valued at more than $822,000.
The tax is the main driver for higher end properties on Lake Mulwala, according to Mr Seeliger.
“Why pay tax if you can buy in New South Wales?” he said.
“But a shortage of listings in Mulwala means that when they do come up, they fly out the door.
“Standard houses and units for sale are few and far between.”
The recent drop in interest rates has, so far, had little impact on enquiries.
Mr Seeliger said the Melbourne market was starting to pick up and the effect would ripple through once sales begin to settle.
Nikki Farmer from Yarrawonga Escapes holiday accommodation said she saw no increase to rental rates since the rise in land tax, but prices had “definitely increased” since the short-term levy was introduced.
“The rental levy is currently set up with our guests paying the levy,” Ms Farmer said.
“This levy is 7.5 per cent + GST of the total booking, which includes all fees and charges such as cleaning and booking fees.”
Despite the increase in holiday rental rates, she said the summer season had been “super busy” and hadn’t slowed down heading into autumn.
“We are seeing more demand from owners to short-term rent their holiday homes since the land tax and the short-term rental levy were introduced,” she said.
“We’re getting phone calls every day.
“We had a phenomenal summer, and last winter was better than expected as well.”
Although it’s been a busy tourism season, with higher visitor numbers, Yarrawonga Mulwala Tourism reported relatively subdued trading with spending levels lower than in previous years.
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