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Selling, buying or renting a house in Brisbane could all be impacted in different ways after the federal election



Selling, buying or renting a house in Brisbane could all be impacted in different ways after the federal election

Ahead of a potential ALP win at the federal election, predictions about the Brisbane residential property market abound.

Some show a common theme while others downright contradict each other.

As I gaze into the crystal ball, these could be some potential scenarios:

• Houses and units are two different markets in Brisbane. The house market is experiencing slow and steady growth but the unit market is in recovery mode.

• Conditions favourable to both markets in the next few months may come from the ALP’s policy on negative gearing and capital gains tax discounts. There could be a temporary increase in demand for existing residential properties in Brisbane as people try to snap up properties that may no longer be negatively geared under an ALP government.

• This may be more pronounced in Brisbane as housing prices are still significantly more affordable here compared to Sydney and Melbourne, despite the latter’s declining markets. Data appears to suggest that net migration to Queensland has been on the rise.

Selling, buying or renting a house in Brisbane could all be impacted different ways after the federal election

• Any “mini boom” in the Brisbane housing market may also favour the “second-hand” market, rather than new builds, as there is a perception that older properties generally have bigger floor areas and better “guts” for improvements. New builds are also not subject to the same negative gearing restrictions if enacted, which may further ease their demand.

• Naturally, the availability of credit and future interest rate movements will be big factors affecting whether the mini-boom is realised in full. This affects how the lenders will behave, due to the impact of the outcome of the royal commission on banking.

• Once the ALP’s policy comes into full force, on the back of the mini-investment boom, there may be excess residential stock coming on to the market. This may drag down existing rental yields and hamper price growth for some time. However, normal market forces

will eventually prevail to normalise the market.

• As long as the ALP’s policy persists, there may be a permanent bias in favour of new builds from the investors’ perspective, while new-home buyers may prefer existing stock to avoid the competition.

Eddie Chung is a BDO partner, Tax & Advisory, Real Estate & Construction.

Originally published as Federal election could change Qld property market



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Why Australia’s falling house prices don’t apply to Brisbane



Why Australia’s falling house prices don’t apply to Brisbane

Australia’s falling house prices do not apply to Brisbane, according to a leading property analyst, who has slammed the latest comparisons between now and the global financial crisis as “reckless and alarmist”.

On Tuesday it was reported that prices dropped 5.1 per cent on average across the eight capital cities over the year to the December quarter, a steeper decline than at any time since the ABS began keeping records in 2004.

This included the period during the GFC when prices dropped 4.6 per cent in the year that ended in the March quarter of 2009.

But Propertyology managing director Simon Pressley said the constant negativity around Australia’s falling house prices was misleading because the situation focused only on Sydney and Melbourne and completely ignored the rest of the country.

“The way it’s been spat it out, it implies that it doesn’t matter where you live out of 25 million people, you’ve lost a lot of wealth over the last 12 months. That’s just factually incorrect,” he said.

Why Australia’s falling house prices don’t apply to Brisbane.

“Locally, all of Queensland hasn’t had the massive growth and the downturns that Sydney and Melbourne have had. Most of Queensland has not seen a growth cycle since 2007.

“We’ve got nothing to worry about. We’ve got low mortgages, low housing prices and we’re much closer to experiencing a good property market era.”

The ABS data showed prices were down in Brisbane, albeit only slightly, by 0.3 per cent over the past year, while Hobart jumped 9.6 per cent, Adelaide prices rose 1.5 per cent and Canberra lifted 1.8 per cent.

Domain senior economist Trent Wilstshire said the national figure that showed such alarming price declines were driven by Sydney and Melbourne.

Other places are seeing prices stagnate or fall slightly but for Brisbane, the Gold Coast and the Sunshine Coast — all of southeast Queensland really — the price prospects there seem OK,” he said.

Why Australia’s falling house prices dont apply to Brisbane

“They’ve been dragged down a bit by the overall market conditions and tighter lending conditions but not to the same extent as Sydney and Melbourne.

“Australia is not one housing market, it’s a collection of different housing markets.”

BIS Oxford Economics head of property research Angie Zigomanis said it was important for people living in Brisbane to understand the full picture of what was happening in the property market, which was considerably different outside of Sydney and Melbourne.

“There’s no reason to be scared to enter the market (in Brisbane),” he said. “We don’t see it falling away like we have in Sydney and Melbourne.

“Sydney and Melbourne are the markets that are going to come off because they had the unaffordability issues and the most exposure to investors — and people going out and stretching themselves financially — so they’ve got the most negative factors.

Why Australia’s falling house price don’t apply to Brisbane

“Investors have played a much smaller part of the market in Brisbane. People in Brisbane also haven’t had to stretch themselves as much with their borrowing activity. Brisbane hasn’t had the big run-up in prices, so it doesn’t have the big falls.”

Mr Zigomanis said although there were still challenges that related to Brisbane, such as the stricter lending criteria from banks, the overall prospects for Brisbane were much brighter.

“Yes, the numbers were pretty flat for Brisbane — and I wouldn’t be surprised if more of that was to do with the unit market than the housing market — but Brisbane has an improving economy and strong population growth, which fuels rental demand and subsequent buyer demand,” he said.

“Those conditions affecting Brisbane, like the tight lending criteria, are affecting every city or town in Australia. The difference is that Brisbane, as is the case with a lot of other parts of Australia, has its own characteristics that have a lot of upsides.”

Banks have been more cautious about granting home loans, under pressure from the bank regulator and the financial services royal commission, but Mr Pressley said he had noticed a relaxing of credit in the past few weeks.

Why Australia’s falling house price dont apply to Brisbane

“The ANZ last week increased their LVR (loan-to-value ratio) to investors from 80 per cent to 90 per cent and their interest-only term from five years to 10 years. Westpac has thrown out an extremely low interest rate to investors,” he said.

“We’re now seeing evidence that they’re trying to correct their ways. As that happens, it’s not just making the money available, it’s impacting the positive sentiment.

“So there’s only been a few things like that, but they’ve happened. Credit is slowly but surely becoming accessible again and that’s positive for Queensland and all of Australia.”




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Queensland’s 100,000-property public housing shortfall revealed



Queensland's 100,000-property public housing shortfall revealed

Queensland has a severe shortage of social and affordable housing, an issue that is projected to get worse by 2036 according to new research.

More than 102,000 additional social houses are currently needed across the state, and 54,700 affordable houses are also needed with nearly 13 per cent of Queenslanders spending more than 30 per cent of their income on rent.

By 2036, Queensland is projected to need 254,300 more social and affordable houses – the second-highest unmet need behind NSW, the report found.

The new figures come from a UNSW City Futures Research Centre report on social housing shortfall across Australia.

Regional social housing shortfalls are higher than in Brisbane, the data shows, but Brisbane residents are slightly more likely to be spending more of their income on rent.

Housing Minister Mick de Brenni said housing affordability was a “big issue” for Queensland.

“Through the Palaszczuk government’s $1.8 billion Queensland Housing Strategy, Labor is driving key reforms and targeted investment across the housing continuum,” he said.

“The Strategy commits us to build more than 1000 affordable homes for Queenslanders, as well as a further 4522 new social homes to help ensure everyone has a safe, secure and stable place to live.”

Lead researcher Laurence Troy said 22.5 per cent of Australia’s entire housing growth must go to social housing to meet demand into the future.

“Our analysis shows that the sheer number of households in rental stress across the country means that if we’re going to meet the need, at least 12 per cent of all our housing by 2036 will need to be social and affordable housing – which is a very reasonable ambition in global terms,” Mr Troy said.

“To cover the backlog of unmet need and future need in Australia two in 10 new homes will need to be for social housing over the next 20 years, and a further one in ten for below-market affordable rental housing.”

Mr Troy said the research’s financial modelling found the “best and cheapest way” for governments to meet the need for social housing was to fund it through upfront grants and low-interest government financing.

“Delivering below market rental housing through the not-for-profit sector, as opposed to the private equity model, will save $3 billion a year by removing developer mark-ups and shareholder returns,” he said.

The financial modelling was commissioned by the NSW community housing sector.

Mr de Brenni said the state government was “listening” through its recent public consultation on rental reform and was committed to investing in affordable housing in partnership with community housing, to provide more subsidied homes for low income earners.

“We heard Queenslanders are struggling to afford rental properties in the suburbs close to where they work,” he said.

“Through our Build-to-Rent pilot project, we are seeking to work with the private sector to increase the number of long-term, affordable rental properties for low to moderate income earners, including key workers in health, early childhood and hospitality.

“Internationally, the Build-to-Rent model is delivering fantastic outcomes and facilities for tenants and we’re looking to see what the market is open to delivering here.

“The pilot, if it proceeds, will see $70 million invested towards delivery of hundreds of affordable rental properties for key workers in inner-city areas where affordability has been identified.”

Mr de Brenni said the registrations of interest for that pilot had seen strong market interest, and the department was considering the responses before calling for expressions of interest.



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Treasury: Negative Gearing Reforms Will Have ‘Little to No Effect’ on House Prices



Treasury Negative Gearing Reforms Will Have ‘Little to No Effect’ House Prices

Federal Treasury has delivered a serious rebuke to the Coalition for exaggerating the impact of Labor’s negative gearing and capital gains changes.

In emails released under freedom of information, acting treasurer Kelly O’Dwyer requested the department fact check the Coalition’s claims that Labor’s policies would cause house prices to fall.

In response, Treasury issued a correction: “The [s]tatement is not consistent with our advice.”

“We did not say that the proposed policies ‘will’ reduce house prices,” the email reads.

“We said that they ‘could’ put downward pressure on house prices in the short-term depending on what else was going on in the market at the time.

“But in the long-term they were unlikely to have much impact.”

Labor has jumped on the release, with shadow treasurer Chris Bowen saying that the government had been “caught red-handed” misrepresenting Treasury’s advice.

For his part, treasurer Josh Frydenberg denied that the government was misrepresenting Treasury, pointing to the Financial Review’s take on the release that changes “could” put downward pressure on house prices in the short term.

Frydenberg quoted building industry group the Masters Builders Association figures.

“If Labor’s policy is in place you’ll see 32,000 fewer jobs and 42,000 fewer homes being built.”

Treasury Negative Gearing Reforms Will Have ‘Little to No Effect’ on House Prices

House prices hit spending

It has been a difficult week in economic policy, with GDP figures released on Wednesday revealing that the economy has slowed significantly, entering a “per capita recession” for the first time in 13 years.

Retail trade figures for the March quarter were also sluggish, with falling house prices impacting wealth and spending.

RBA governor Philip Lowe highlighted the link between the two at the AFR annual business summit on Wednesday.

“The evidence is that a tightening in credit supply has contributed to the slowdown in credit growth,” Lowe said.

“The main story, though, is one of reduced demand for credit, rather than reduced supply.

“When housing prices are falling, investors are less likely to enter the market and to borrow. So too are owner-occupiers for a while.”



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