With a rental vacancy rate under 1 per cent in Wangaratta, a lack of incentive for property investors is impacting new housing growth and the rental supply, according to the housing sector and a local agent.

Victoria also has the highest property tax rate in Australia out of any state or territory and also the lowest tax-free threshold of just $50,000 compared to NSW's $1.07 million.

Rhys Lyster from Garry Nash and Co Real Estate in Wangaratta said there has to be an incentive for people to spend money and there doesn't seem to be too much including for mum and dad investors which make up a great portion.

He explained that Victoria had the lowest tax-free threshold of $50,000, which is an annual tax charged on unimproved value of land.

The threshold was introduced to widen the net and increase state revenue off the back of debt accumulated during covid.

"Victoria's thresholds cut in way too early compared to other states and this is just one aspect that is making it difficult for the numbers to align," Mr Lyster said.

"It's a numbers game and a commercial decision - it's no different if the asset class is shares or commodities.

"People are encouraged to create some financial freedom for themselves and not be a burden on the system in years to come, there needs to be incentives for it.

"At the moment there is no real reason for investors to spend hundreds of thousands of dollars to only break even at very best or make a loss."

The Real Estate Institute of Victoria (REIV) has described last week's 2026-27 Victorian State Budget as a failed chance to restore much-needed confidence in Victoria’s rental market through property tax reform.

The REIV’s 2026-27 budget submission called for the Victorian government to freeze property taxes, and provide targeted tax incentives, for rental providers to rebuild investor confidence and address the state’s persistent rental housing supply issues.

A REIV-commissioned independent survey of 1000 Victorian adults also found that 81 per cent of surveyed Victorians, and 83 per cent of renters, would support a revised rental market policy approach that is more favourable to rental providers if it served to boost Victorian rental property supply.

A healthy balance between social and private housing supply is required to fix the housing problem and Mr Lyster said ongoing roundtable discussions between stakeholders is required.

Mr Lyster said building delays have an impact on renters being able to access housing, not helped by developers facing red tape challenges in being granted permits to develop land.

"People who are trying to invest in property are being hammered, and if it's not with cost, it's delays as a standard spec home could take more than six months and this is after the building permit is achieved," he said.

Meanwhile, the 2026-27 Federal Budget contains an allocation of $500 million to implement reforms that aim to modernise environmental approvals on planning applications.

Housing Industry Association (HIA) managing director Jocelyn Martin said this will help deliver a faster, technology enabled and fit for purpose system that supports urgently needed housing supply.

“Australia’s environmental approvals system has not kept pace with the scale or urgency of our housing challenge," Ms Martin said.

"This budget begins the shift toward a modern system that uses better data, digital tools and AI to deliver faster, clearer and more consistent decisions."