Rents in Brisbane to rise under Labor – study

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A new study predicted that the Labor Party’s plan to modify negative gearing could push the cost of renting in Brisbane by 13% to 22% between 2020 and 2022.

The finding was based on a scenario with no cut to interest rates, an increase in rental yields, and changes to negative gearing and capital gains tax concessions, according to a report by news.com.au.

If the central bank does not lower interest rates this year or in early 2020, rents in Brisbane are likely to jump between 12% and 19%, the study predicted.

“This tax change is going to aggravate the undersupply issue, because our view is that investors will effectively be turned off. Capital gains tax concessions will effectively be halved and they’re going to be demanding a higher rental yield,” said SQM Research Managing Director Louis Christopher.

Labor’s proposal is to limit negative gearing tax concessions to only new properties and half current capital gains tax discounts for property investors.

Even if no changes are implemented, Brisbane rents are likely to rise 3% to 4% in 2019, according to Christopher.

“Our view is that Brisbane is increasingly this year going to turn into a landlord’s market. The period of oversupply that Brisbane experienced from late 2014 to 2018 is fast coming to an end now, so the issue is Brisbane is going into a period of undersupply. We think that’s going to start sometime next year, and we’re already starting to record increases in rents now,” he said.

Data from the Real Estate Institute of Queensland (REIQ) show that over a third of the state’s population are renters, and the industry group’s chief executive, Antonia Mercorella, is concerned that Labor’s proposed reforms to negative gearing and CGT would limit the number of people looking to invest in property in Queensland.

“Over 34% of the population rent in Queensland, so supply of rental accommodation is critical,” Mercorella said.

Top Suburbs : cardiff south , balga , freshwater , westbrook , springwood

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