CONFIDENCE in Queensland’s property sector has fallen for the first time in nearly two years on the back of the latest tax grab proposed by the state government, a new survey reveals.
CONFIDENCE in Queensland’s property market has fallen for the first time in nearly two years on the back of the latest tax grab proposed by the state government.
The ANZ/Property Council Survey released today, taken in the weeks either side of the November state election, has recorded a drop of two index points for Queensland in the March 2018 quarter — the first decline in 20 months.
The state now has the lowest confidence levels of all Australian jurisdictions.
The re-elected Palaszczuk Government has announced plans to increase land tax rates by 2.5 per cent on properties worth more than $10 million and more than double the tax rate for foreign investors from 3 to 7 per cent.
Property Council Queensland executive director Chris Mountford said the results confirmed industry concern about the proposed property tax hikes, which he argued would hurt jobs growth and home values.
“At a time when we need to do more to catch up with other markets, increasing taxes on property is a big economic risk,” Mr Mountford said.
“The impact of these proposed tax increases can already be seen in the figures.
“Forward work schedules, staffing level expectations, and Queensland’s economic growth predictions are all down.”
The Property Council is urging the Government to reverse the proposed tax increases, saying ordinary Queenslanders would pay the price because businesses would be forced to pass on the cost to consumers.
“The proposed land tax hike is ultimately going to flow through to affect capital values, and impose higher rents and costs on businesses,” he said.
“I think there’s a general lack of understanding that foreign buyers are a key ingredient to getting new housing construction starts going.
“If we’re making it harder for those people to invest in Queensland, ultimately that’s going to flow through to lower levels of activity.”
For the last two years, Queensland has consistently lagged behind the major states when it comes to confidence, only remaining in front of Western Australia, where the end of the resources boom created significant economic challenges.
But the latest survey shows a surge in confidence in WA.
“Clearly confidence is starting to return to the WA market,” Mr Mountford said.
“They’ve turned a corner and yet we haven’t had that sentiment shift.
“If anything, we’re still bumbling along behind the other states.”
But ANZ senior economist Daniel Gradwell said that he was not too concerned about the confidence drop in Queensland during the quarter,
“Overall sentiment is still sitting at pretty solid levels, even though it has dropped off recently,” Mr Gradwell said.
“I think it’s fair to say Queensland has essentially moved past its mining-related downturn.
“We’re starting to see economic activity improve, particularly across the labour market with unemployment at its lowest level in about four years.
“So confidence is already translating into actual economic activity.”
St George Economics noted in its latest economic outlook for Queensland that the state’s economic growth had picked up over the past year, with business investment gaining momentum, commercial construction strengthening and robust employment growth.
Nationally, the survey reveals New South Wales has lost its throne to Victoria as the property industry with the strongest outlook.
It gathered responses from 1374 professionals within the residential and commercial property sector.
“It’s a large sample size, so we’re confident it’s reflective of what’s actually happening on the ground,” Mr Gradwell said.
Originally published: www.news.com.au
Land developers call bottom of property market
Land developers AV Jennings and Villa World have called the bottom of the property cycle after a year of slumping sales and consumer caution blew a hole in their profits.
AV Jennings said the current property cycle has “bottomed” and that it will deliver a stronger result next financial year, after its profits were cut in half to $16.4 million by wary homebuyers steering clear of big commitments.
“General market sentiment is clearly beginning to improve … a modest uptick in visitor numbers to sales offices and online is evident and is expected to be sustained during FY20,” AV Jennings said.
Villa World chief executive Craig Treasure said soft consumer sentiment, tight credit conditions and the uncertainty caused by the federal election had created “difficult headwinds”.
“We are seeing that sales enquiries have started to improve across Villa World’s projects, however buyers remain cautious,” he said.
Villa World’s profit after tax of $23 million was also shredded compared to the previous year when it earned $43.6 million.
“This result is consistent with commentary disclosed to the market since December 2018 and reflects the decline in the Australian residential housing market and softer consumer sentiment,” Mr Treasure said.
Villa World’s land projects are concentrated in Queensland and Victoria.
All metrics for the group suffered: earnings per share were down 48 per cent to 18.2c, total revenue fell 11 per cent to $391.6 million, and sales numbers slumped to 870, down from 1788 the previous year.
The property pain was similar at AVJennings where turnover fell 20.3 per cent to $296.5 million and profits crashed by 48 per cent.
“The lower profit reflects softer market conditions, particularly in Melbourne and Sydney,” the company said.
It paid an interim dividend of 1c on 22 March and will pay another 1.5c dividend on 20 September this year.
Villa World has agreed to a takeover by AVID Property group for $2.345 per share. It will declare a fully franked dividend of 31c, as a portion of the total takeover price if it goes ahead.
Brisbane Prices Could Be Headed For Recovery
Brisbane prices are at their lowest level in the cycle, according to the latest national property clock from Herron Todd White (HTW).
The house values in Brisbane, Bundaberg, Ipswich, Rockhampton, and Toowoomba were at the bottom, according HTW.
Meanwhile, prices in Cairns, Gladstone, Mackay, Townsville, and the Whitsundays are starting to recover, the data showed.
There was momentum for the price growth in Brisbane, given that the capital city had been “bouncing along the bottom for some time now”, HTW Brisbane managing director Gavin Hulcombe told The Courier-Mail.
“I think it will be (a) steady rise, but my suspicion is in a couple of years’ time we might look back and think it (now) probably wasn’t a bad time to buy. Some areas are likely to perform better than others,” he said.
Brisbane units are also at the bottom of the price cycle, along with Bundaberg, Ipswich, Mackay, Rockhampton, Toowoomba, and the Whitsundays, according to HTW.
Apartment prices in Cairns, Emerald, Gladstone, and Townsville are already rising, the figures showed.
Index warns council unit ban will impact boomer downsizers
A new housing index has warned that Brisbane will face a flood of ageing baby boomers with nowhere suitable to live unless it embraces greater density in suburbs where houses dominate.
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