When Campbell Newman became the new Queensland premier in a landslide victory earlier this year, it was clear that expectations were running high – especially among property circles.
Here was a man who was expected to roll up his sleeves and get to work on the state’s many problems with housing. He may not have had all the answers, but many thought a change from what the Bligh government had been doing would bring with it a refreshed approach. ‘New’ might not be better necessarily, but ‘new’ was at least different.
More recently, the feeling has gone a little sour. Since June, the Real Estate Institute of Queensland (REIQ) has been lamenting what it calls deliberate efforts by the state government to target property investors for income.
The institute says that the government’s revenue-raising measures are a disadvantage to prospective property buyers, who they say are being made to bail out the state’s fiscal woes. It’s a position the institute has been taking up strongly.
They point out the following potential revenue-raising measures outlined in the state government’s financial audit as having a negative effect on investors:
Imposing a $100 levy on all property owners
Reducing or removing the concession on land tax
Applying a premium transfer duty rate
Increasing the landholder acquisition duty rate
Acting REIQ chief executive Antonia Mercorella says that if these measures were to be put in place it would cause a chain reaction among investors who are already sick and tired of rescuing the government.
“Property owners – and investors specifically – seem to be forever targeted by all levels of government when they are short of cash, whether it is through higher council rates, one-off levies or higher rates of stamp duty,” she says.
She adds that additional legislative and compliance obligations on property investors over recent years, coupled with weaker returns on investment, have resulted in many opting to sell their rental properties. Mercorella says this phenomenon is evident in ABS data, which shows the number of investors active in the Queensland property market has halved in the last five years.
Were additional costs to be laid on Queensland investors, Mercorella says the state’s thinning investor numbers are likely to decline even further. “We are [already] starting to see the impact of this reduced investor activity… if land tax thresholds are reduced or removed, the added costs would put an end to the glimmers of renewed investor activity we have seen in recent months,” she says.
A less heated development for investors is that the supply of properties in the state appears to be on the wane, and for investors with existing properties, this could possibly aid prices growth in the future. BIS Shrapnel residential senior manager, Angie Zigomanis believes the market first began to move into a deficiency this year, reflected in vacancy rates that have moved below the balanced market rate of 3%. He expects this to underpin recovery in rental growth.
“The Queensland economy is also now beginning to turn around with the next round of investment in new resource projects coming through” he says. “Consequently, economic conditions are forecast to rapidly improve, with ensuing employment and income growth set to create a greater level of purchaser confidence.”
Zigomanis adds that as the underlying dwelling deficiency becomes more pronounced, the state should start to see a return to healthy prices growth. He expects the true effect of this to be apparent by the end of the year, or by early next year.
Further on, he sees a bright future. “By the end of 2014/15, rising interest rates will again begin to impact on prices, but only after a forecast total rise of 20% in the median house price over the three years to 2015, representing an average rise of 6.2% per annum,” he says.
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