Broadly speaking, the Queensland housing market will not be significantly impacted from announcements in the Federal Budget. We are disappointed in those measures that limit investor activity because the Queensland housing market urgently needs investors.
As a state that does not face a significant housing affordability issue, most of the measures were designed to tackle problems that are faced by Sydney and Melbourne markets.
We have 93 suburbs in Greater Brisbane that are priced at or below $500,000. Sydney has just four suburbs and Melbourne has 11. The issues that are faced by those markets simply do not exist here in Queensland.
Key areas for Queensland's housing markets include:
First-home buyer super saver scheme:
We welcome all measures designed to help first-home buyers get into the market. However, the super-saver scheme which allows FHBs to salary sacrifice $15,000 a year into their super account, capped at $30,000 in total, would not be as effective as the State Government broadening the first-home buyer grant to include established homes, which is how the Federal Government originally intended this grant to be used.
The annual median sale price for houses and units in Brisbane LGA was $643,000 and $445,000. The $30,000 deposit only represents 4.6 per cent and 6.7 per cent of the value of a house and a unit in Brisbane. This means that the measure does not even support saving of the full deposit required to avoid mortgage insurance on the loan (when usually a minimum deposit of 20 per cent is required).
We don't share concerns that this will add upward pressure to prices as the Queensland market doesn't face the same demand pressures that Sydney and Melbourne face. We agree it will potentially offer limited help with that all-important deposit, which is a major challenge for Queenslanders where wages growth has been flat for an extensive period.
Allowable deductions on investment properties:
The REIQ is greatly concerned about the impact these changes will have on investors who own properties in the Queensland market. For a vast array of reasons this market needs a stable, consistent supply of rental properties to the private rental market.
By removing deductions such as travel associated with the property we fear that this will discourage Brisbane-based or interstate investors from considering a purchase in regional Queensland. Removing depreciation benefits on certain items (ovens, dishwashers etc) mean the cost of owning an investment property will rise. We are currently assessing the likely impact on the average investor, however, our first-draft analysis suggests most investors will face a rise of around $2000 a year.
Tax breaks for downsizers:
As hold periods in Brisbane grow to more than 11 years, the market is being slowed by a lack of listings. We welcome these incentives that will encourage downsizers to sell the family home and move into a better-suited sized home by allowing retirees to contribute up to $300,000 from the sale of their home into their superannuation. These contributions will also be exempt from the work test, which will alleviate concerns for many.
Foreign ownership/foreign buyer measures:
We have not seen any evidence to suggest that Queensland's housing market is being skewed by foreign buyers. A new $5000 levy on foreign-owned properties that are left vacant for at least six months of the year is likely to have little impact on our markets.We are also concerned with the changes to CGT for foreign owners, specifically, the withholding payments that were introduced last year for all properties selling for $2 million or above. That threshold is being reduced to properties valued at $750,000 and the amount increased from 10 per cent to 12.5 per cent. The number of transactions captured under the new threshold will add significant levels of red tape to transactions in Queensland.
Additionally, we have seen no evidence that the "zombie apartment" issue exists in Queensland.
The REIQ does not endorse a measure that is designed to limit investors buying in Queensland, whether they are local or foreign. This state's housing market would benefit from increased investors activity and when measures are introduced to limit that potential, we are concerned.
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