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Brisbane apartment oversupply: Rents predicted to fall 10% this year

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Property analysts have given their most dire warning for the Brisbane apartment market yet, predicting rents could fall as much as 10 per cent in the next 12 months.

Michael Matusik from Matusik Property Insights made the call: “It has the potential to ‘get out of hand’, I guess you could say,” he said.

Mr Matusik cited a number of different economic factors for the potentially significant drop in apartment rents. “There’s a pretty persistent unemployment rate,” he said. “You’ve got about five or six people applying for every job.”

“And wherever you see markets with a [rental] vacancy rate of 3 per cent you see rents either stay flat or fall.”

This coupled with the rising supply of rentals in Brisbane, meant investors would be forced to drop their prices to compete with cheap, new and readily available apartments in inner city Brisbane.

“The person who’s got the second hand unit or the house in the inner middle ring suburb, they have to drop the rent to attract tenants,” Mr Matusik said.

Mr Matusik said investors needed to prepare for the fall to be as much as 10 per cent. “It’s a worse case scenario but it could be that much,” he said.

But Domain Group chief economist Andrew Wilson said a 10 per cent fall in rents was unlikely.

“I think we’d have to see a lot more vacancies than we have now,” he said.

He conceded current sentiment was gloomy. “There’s no doubt there’s strong downward pressure on rents in Brisbane,” he said.

“We’re releasing our rent report next week and it will show a fall in rents in Brisbane.”

Dr Wilson thought 10 per cent would be an extreme drop and said immigration growth would slow the fall. “We are seeing a pick up in migration in South East Queensland now,” he said.

“I think affordability is attracting people back.”

Michael Yardney from Metropole was largely on-board with Mr Matusik’s prediction. “I think it is very likely there will be a significant fall in income and minimal capital growth for five to 10 years,” he said. “I never thought that inner city or off the plan apartments have made good long term investments.”

Mr Yardney said the relative conformity among off-the-plan apartments meant their biggest selling point was the fact they were brand new. “Each big building is built out by an even larger tower, so there is no real scarcity.”

He also was concerned a lot of the apartments wouldn’t sell well with owner occupiers if investors weren’t interested. “What I’m getting at is there’s more stock but there’s a lot of the wrong stock, it’s not how most of us want to live,” Mr Yardney said.

To avoid empty rentals, Mr Yardney said landlords should reassess their expectations of income. “Investors will have to prepare for longer vacancies initially and less cash flow over the term of their investment,” he said.

Mr Matusik said many people in the industry were in denial about the potential effects of the apartment oversupply. “A lot of owners and investors with older stock don’t understand we need to meet the market and roll with the punches.”

“The market will sort itself out.”

Originally Published: https://www.domain.com.au/

 

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Property Management

Queensland property chiefs warn rise in land tax will hurt more than the rich

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Brisbane Tax News

NEW Queensland Treasurer Jackie Trad has defended the Government’s planned “Robin Hood” property tax ahead of her first Budget update tomorrow.

Ms Trad dismissed claims from the Property Council that the planned 2.5 percent land tax on properties worth more than $10 million would hurt jobs growth and property values.

“This is a very modest increase… we think it’s fair that those that can pay a little bit more, do pay a little bit more,” Ms Trad said.

Overnight, The Sunday Mail quoted property chiefs as warning Premier Annastacia Palaszczuk’s last-gasp election tax grab would destroy jobs and wipe more than $41 billion from land values in Queensland.

A 2.5 percent extra slug on owners of land worth more than $10 million was part of a suite of tax measures in Labor’s final campaign announcement, two days before last month’s state election win.

The Premier compared herself to Robin Hood, targeting only the richest.

But the Property Council says ordinary Queenslanders will pay the price, with a risk to employment and businesses forced to pass on the cost to consumers.

The land tax measure will be included in the Mid Year Fiscal and Economic Review to be presented tomorrow by Ms Trad, who was handed the role of treasurer in last week’s Cabinet reshuffle.

It is expected to raise an additional $227 million for the state’s coffers.

“The inconvenient truth for the Government is the vast majority of properties that will have to wear this tax are commercial, retail, industrial and tourism properties,’’ Property Council Queensland executive director Chris Mountford said.

It would inevitably flow on to tenants.

“We heard all through the election campaign that business cost pressures are particularly acute because of price increases like electricity … making it tougher for businesses to employ people. Now Queensland businesses will need to add land tax to their list of concerns before they think about hiring staff.”

Economist Nick Behrens said the amount raised through land tax had risen faster than any other tax in Queensland in the past decade – up 10percentnt, compared to the 66 percent Australian average.

The new measures mean only South Australia and Western Australia will have a higher rate. That will make it harder to lure businesses to set up in the Sunshine State.

“We’re in a race to attract and retain investment. Now we’re putting lead in our saddlebags that will impede our ability to compete,” Mr Behrens said.

Ms Trad said the extra land tax would apply only to the wealthiest 850 payers of land tax.

“It does not include farms, and it does not impact on the family home. The land tax ensures that those who are benefiting most from our growing economy and rising land values make a fair contribution to frontline services in Queensland.”

Ms Trad defended the Palaszczuk Government’s employment performance, saying 143,400 jobs were created in the first term of office.

Originally Published: www.couriermail.com.au

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Property Management

Why buyers are flocking to Morningside

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Why buyers are flocking to Morningside
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Property Management

Disputes between Queensland landlords and tenants at record high

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brisbane property management

DISPUTES between tenants and landlords in Queensland have reached a record high as fed-up renters fight back against unfair treatment.

The Residential Tenancies Authority was forced to intervene in 27,405 disputes between tenants and property managers or owners during the 2016/17 financial year.

Half of those disputes related to bond distribution, 17 per cent to compensation in excess of the bond and 8 per cent to property repairs.

More than 800 agents and owners were also investigated for non-compliance with some of the most common breaches including failing to lodge a tenant’s bond to the RTA, not providing documents such as entry reports and tenancy agreements and unlawful entry to properties.

Brisbane woman Jessica Thomas has taken agents and landlords to the Queensland Civil and Administrative Tribunal six times over rental disputes and has won every case.

“Landlords taking the bond for no good reason happens all the time and most people just accept that they lose their bond at the end of a rental and that’s just wrong,” Ms Thomas said.

REIQ CEO Antonia Mercorella blames mum-and-dad investors.

“It is quite a scandal as far as I’m concerned.”

From entering her property without warning to harassment in her home, refusal to undertake repairs and even legal threats, Ms Thomas has seen it all.

“Last year when I moved into a new property, the real estate and the landlord lied to me about the state of the property,” she said.

“As soon as I turned the water on, water started seeping out of the walls and I found mould was growing everywhere.

“The majority of us aren’t those terrible tenants you hear about, we just want a safe place to live in peace.”

REIQ CEO Antonia Mercorella said the increase in disputes corresponded with an increase in renters and that most landlords were mum-and-dad investors.

“For these landlords every expense can exert additional financial pressure and increase friction between landlords and tenants,” she said.

Do Not Rent Me founder Anthony Ziebell

“Both sides can become more litigious in such a high pressure economic environment.”

Anthony Ziebell who founded Don’t Rent Me, a website dedicated to helping tenants expose bad landlords and agents, said renters were becoming more confident standing up for themselves.

“It’s very difficult because landlords hold all the power and that’s because a lot of people can’t afford to own their own houses,” Mr Ziebell said.

“Unless we’re prepared to stand up and do something together, we won’t see any change.”

Originally Published: www.couriermail.com.au

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