Confidence in the Victorian Government also remains the lowest in the country, sitting at -65.3 points, in stark contrast to positive government sentiment recorded in Queensland, Western Australia and South Australia.
Property Council of Australia Victorian Executive Director Cath Evans said the results show a sector struggling under the weight of persistent tax pressure, rising costs and overly complex regulation.
"Victoria is consistently recording extremely low levels of confidence in the state government, and in the industry's ability to deliver much-needed supply of new housing. This should be a wake-up call to the government that urgent action and a new approach is needed to reinvigorate the sector," she said.
"67 per cent of Victorian respondents feel that the state's tax settings are the number one issue holding the industry back.
"We continue to advocate for urgent tax reform and red tape reduction to speed up the delivery of housing that Victorians urgently need.
"This sentiment survey also comes on the back of the Property Council's Attracting International Capital report proving that overseas institutional investment has declined 53 per cent in the last three years in Victoria," Ms Evans said.
Victoria was also the only market in Australia to report a decline in forward work schedules, signalling softer construction pipelines and reduced development activity in the months ahead.
"Victoria cannot afford to stumble into the 2026 election with the worst investment prospects in the country.
"We need urgent action to restore our competitiveness. That means a commitment to tax reform, streamlined planning and real solutions to unlock housing supply.
"The message from industry is clear – until confidence is restored, projects will stall, investment will move elsewhere, and Victorian households will pay the price."
