One of Australia’s most prominent property investors has urged investors not to make rushed decisions in response to the Federal Government’s proposed tax reforms, arguing that a withdrawal of investment from the housing market could place further pressure on rents across the country.
Sydney-based investor Victor Kumar, Managing Director of Right Property Group, believes concerns over the proposed changes have prompted an emotional response from some investors, despite the reforms not yet becoming law.
“People making this knee-jerk reaction is crazy,” Mr Kumar said.
“It might not even see beyond two or three years and it’s not even law yet.”
Mr Kumar, who has built a property portfolio with his wife Reshmi valued at more than $40 million, says the debate has highlighted broader concerns about housing supply and investor confidence.
He questioned assumptions that the proposed reforms would have only a limited effect on rental prices, arguing that any reduction in investor activity would ultimately tighten rental supply.
“I’d love to see the workings of how they came up with those figures,” he said.
“If investors pull back nationally, which they are already doing, rents will rise. It’s that simple.
“This isn’t a Sydney problem or a Melbourne problem. It becomes everyone’s problem if the rental supply drops even further into crisis territory.”
Mr Kumar points to early market activity as evidence that uncertainty is already influencing behaviour. He said prices for new townhouses in Victoria have risen by three to four per cent since the Federal Budget, although broader market trends are still developing.
Housing economists and policy advocates have long debated the role of tax settings in Australia’s property market. Supporters of reform argue changes to investor incentives could improve housing affordability for first-home buyers, while critics warn that reducing investor participation may constrain rental supply at a time when vacancy rates remain low in many parts of the country.
Mr Kumar believes Sydney is likely to experience the effects first because of its high property prices and tight rental market, but said other capitals including Melbourne, Brisbane, Adelaide and Perth could also face pressure if investor confidence weakens.
While some investors are adopting a wait-and-see approach, he said others are adjusting their strategies rather than stepping away from the market altogether.
“Our clients aren’t fearful, but they are cautious,” Mr Kumar said.
“We have shifted our investing strategy for the next six months to focus on properties with potential for multiple incomes, prioritising houses already built but less than 12 months old, bringing forward subdivision and development opportunities on existing portfolios, and delaying older, smaller set-and-forget purchases until yields improve.”
Drawing on nearly three decades of investing experience, Mr Kumar said political and policy changes have regularly shaped market sentiment, but long-term planning has generally proven more effective than reacting to short-term uncertainty.
His portfolio spans most Australian states and territories and includes a mix of income-producing properties, development sites and long-term growth assets.
“I’m seeing it as a huge opportunity, if anything,” he said.
“The savvy investors were positioned anyway to pull the trigger on developing new supply via new homes and townhouses on their existing holdings.”
Mr Kumar argues that any lasting response to Australia’s housing shortage should focus on encouraging additional housing supply. Among the ideas he supports are incentives that would help homeowners upgrade, subdivide or develop their existing properties.
As debate over the proposed tax reforms continues, he believes experienced investors will focus on adapting their strategies rather than retreating from the market.
“They’re adjusting, they’re planning, and they’re positioning for the next decade, not the next headline,” Mr Kumar said.
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