Real Estate

QLD LAND TAX MOVE IS A GOOD START, BUT THERE’S MORE TO BE DONE AS INTERSTATE MIGRATION HITS RECORD HIGH HOUSING DOWNTURN COULD BE SHORT-LIVED

Land tax plans shelved infation expectations fading

Infation has peaked earlier than expected, with infation pressures apparently easing across many parts of the global economy. Consequently, Australia’s housing downturn could prove to be relatively shortlived, as solid demand for housing driven by smaller household sizes and external migration is expected, according to Pete Wargent, cofounder of Australia’s frst national marketplace for buyer’s agents, BuyersBuyers.

Mr Wargent said, “the downturn in housing market sentiment has been largely driven by one factor alone: infation and the related fear of a sharp increase in mortgage rates. For as long as consumers fear rising mortgage rates, activity in the housing market will largely be reduced, with both volume of buyers lower, and the duration of transaction longer on pause.”

“The good news for borrowers is that the peak of the infation hysteria now appears to have passed. Market-based measures of infation expectations in the U.S. suggest that the peak is already in, with 5-year breakevens dropping all the way back down towards 2.6 per cent, and 10-year expectations now below 2½ per cent. These are the lowest fgures since September last year.”

“Australia is some way behind other parts of the world, and with rising prices for electricity and rents still to fow through to the offcial fgure’s infation isn’t likely to peak here until the end of 20221. But the important thing for consumers is gaining a level of comfort that infation will fall away, and therefore not being fearful of rising interest rates. Australia’s biggest bank also sees RBA cutting interest rates in 2023. In both historical and absolute terms, of course, interest rates are still relatively low” Mr Wargent said.

“Analysts will point out that any increase in mortgage rates reduces borrowing capacity, which is obviously true. But most borrowers don’t use their full borrowing capacity, and the most crucial factor in ending the downturn is simply a change in sentiment. As a matter of fact, lenders are now reducing interest rates for new borrowers”

Bond yields down

BuyersBuyers CEO Doron Peleg said that surging futures markets had priced in too much in the way of interest rate hikes, and the rising rates tide is now reversing.

Mr. Peleg said, “from only two weeks ago, Federal Reserve futures curves have calmed down signifcantly. In the U.S. markets are already looking for several interest rate cuts

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in 2023. Meanwhile, Australia’s 3-year bond yield, which is a key funding benchmark, has already declined from 3.8 per cent to 2.9 per cent in only the past fortnight.”

The shelving of new land tax plans is a move in the right direction for Queensland’s rental market, but there’s more work to be done, according to Pete Wargent, co-founder of Australia’s frst national network of buyer’s agents, BuyersBuyers.

Mr Wargent said, “one positive that’s come out of the disruption over recent weeks and the round table discussions is that there’s now a genuine focus on solving some of the rental market challenges that won’t go away easily any time soon.”

“We always felt that taxing interstate investors was going to be a case of overreach, but the debate has stirred some worthwhile suggestions in terms of freeing up rental supply, particular in respect of affordable rental options.”

“Annual net migration from other states into Queensland has run to record high levels this year, and Queensland has a unique opportunity over the next decade to become a powerhouse location in the lead-up to the Brisbane Olympics showcase in 2032”.

In that context, we should be welcoming interstate investment in both commercial and residential property supply” Mr Wargent said.

Migration soars to record

BuyersBuyers CEO Doron Peleg said there will be a pressing need for landlords going forward.

Mr Peleg said, “net interstate migration into Queensland hit a record high of 54,000 over the year to March, so that’s over 1,000 reasons per week why there will still be very strong demand for rental properties.” “For the time being Queensland is leading the nation in terms of population growth, and with the international borders now open the pressures will intensify for some time.”

“The proposed land tax changes put our investor enquiries on a total pause, and some investors have already sold rentals, or at least had made plans to sell.”

“The reversal in the stance of the Queensland government should help the rental market to stay far more in the balance going forward,” Mr Peleg said.

Bright outlook for QLD

BuyersBuyers cofounder Pete Wargent said the outlook for Queensland is bright, as the state benefts from the shift towards working from home and fexible working arrangements.

Mr Wargent said, “in the knowledge and information era there are many more people who could choose to live anywhere within reason and choose to make south-east Queensland their home.”

“I include myself in that lucky cohort. As a former resident of the big city, I am now able to work in one of the world’s great lifestyle regions.”

“Hopefully there will be no further plans to discourage investment in the state. It would be wonderful to think that a decade from now Australia is thought of as having three major cities, Sydney, Melbourne, and Brisbane, and three powerhouse states from an economic performance standpoint” Mr Wargent said.

FIRST HOME BUYERS CAN NOW CALCULATE A FASTER PATH TO HOME OWNERSHIP

Making home ownership more achievable is one step closer with an online calculator now available to help eligible NSW frst home buyers choose between a small annual property payment or paying a bigger upfront stamp duty.

Under First Home Buyer Choice, eligible frst home buyers will have the choice of a smaller annual property payment or a traditional upfront payment for properties with a purchase price of up to $1.5 million.

Premier Dominic Perrottet said choice was central to this game-changing reform and will help put keys in the hands of more new owner-occupiers sell their home within 10.5 years, with frst home buyers likely to sell even sooner. That means for the majority of frst home buyers that don’t already receive stamp duty assistance, First Home Buyer Choice will not only allow them to break into the property market earlier, but pay less overall,” Mr Kean said.

“First Home Buyer Choice will help young families take their goals of home-ownership into their own hands and fast-track their journey to the great Australian dream.”

Finance Minister Damien Tudehope said the calculator was an important tool that would make it easy for

home owners sooner by shaving years off the time it takes them to save for a deposit.

“Home ownership is the investment that starts paying dividends from the moment you walk through your front door for the frst time and we don’t want people to have to wait an extra couple of years to reap those benefts,” Mr Perrottet said.

“Choice is at the heart of these game-changing reforms that will put keys in the hands of new home owners much sooner and allow young people to capitalise on the fnancial security that home ownership delivers.”

Treasurer Matt Kean said the First Home Buyer Choice calculator will help frst home buyers decide for themselves which pathway to home ownership best suits their fnancial circumstances and personal aspirations.

“Treasury analysis indicates half of all frst home buyers to make the decision that was right for them.

“When you own your own home, you own a stake in our nation, and the First Home Buyer Choice will help more young people across NSW do exactly that,” Mr Tudehope said.

“The calculator is easy to use and will fnd the land value of eligible properties under $1.5 million to calculate the options.”

Legislation for the First Home Buyer Choice, which was announced in the 202223 NSW Budget as part of the Government’s integrated $2.8 billion housing package, will soon be introduced into Parliament.

For more information on the First Home Buyer Choice, go to https://www.nsw.gov. au/initiative/frst-homebuyer-choice

To view the calculator, go to https://www. service.nsw.gov.au/ transaction/calculateyour-property-tax