Rental rates would be driven upwards if negative gearing benefits were removed, the Real Estate Institute of Queensland (REIQ) claims.
The real estate industry lobby has criticised recent comments from Labor Shadow Treasurer Chris Bowen, who flagged that the party may wind back negative gearing benefits if it comes to power.
REIQ chief executive Antonia Mercorella believes negative gearing increases the supply of affordable rental properties.
“Investors help maintain supply to the rental market and a strong supply also ensures rental affordability is maintained,” claims Mercorella.
“In Queensland more than a third of our population is in rental accommodation, so it’s crucial that supply is maintained for this large section of the community.
“If private rentals were drastically reduced this would place enormous strain on the limited resources in public
“It would also serve to drive up rents in remaining limited stock,” she says.
Mercorella cited a “surge” in rents when the Hawke government removed negative gearing benefits between 1985 and 1987.
“We saw rental affordability plummet in Sydney and Melbourne when negative gearing benefits were quarantined.”
Her claim mirrors those made by Treasurer Joe Hockey recently on ABC’s Q&A.
“You saw a surge in rents and those people who were paying rents are usually – not always, but usually – people that can’t afford in many cases to buy their own homes,” Hockey said last month, of the 1980s negative gearing changes.
However, his claims were refuted by economist John Daley of the Grattan Institute, who said the rental increase was confined to Sydney, which could have been attributed to an undersupply of property.
“But look beyond Sydney and rents were dead – barely moved in Brisbane, didn’t go up very far in Melbourne, didn’t go up very far in Adelaide,” Daley said on the show. The varied performance of rents across Australia “made you suspect very strongly that the race memory we have of abolish negative gearing, that rents will go up, is a race memory built on Sydney,” he said.
Mercorella, however, believes there is still reason to draw evidence to support negative gearing from the 1980s.
“Sydney and Melbourne are our bellwether states, and they lead the property market trends, so we know with absolute certainty what will happen if we do this again – it will destroy rental affordability and place enormous strain on the public housing system as investors desert property as an asset class,” she argues.
She cites the Queensland government’s Housing 2020 report, published in 2013, which details plans to scale back public housing, encouraging residents to consider social housing “transitional”.
According to the REIQ, investors make up 34% of owners in the residential market.
By JESSIE RICHARDSON
Investors Lead Home Loan Rush
Property investor lending in January has risen by 10.5 per cent, lifting the overall value of home loans to $28.7 billion in the month—an increase of 43 per cent on 2020.
The surge in the latest Australian Bureau of Statistics figures occurred across all states and territories, with the exception of the Northern Territory, to be 44.3 per cent higher year on year, the largest annual growth on record since 2003.
Owner-occupier lending for homes rose 10.9 per cent in January, 52.3 per cent higher than in January 2020, with first home buyers increasing by 9.6 per cent to be at the highest level since May 2009, mirroring the similar uptake following the global financial crisis and the introduction of the first home-owner grant.
Investor lending for housing lifted by 9.4 per cent, capping a 22.7 per cent rise across the last twelve months and revealing a renewed appetite in new loan applications.
The lift marks the the largest rise in new loan commitments for investor housing since September 2016.
The number of first home buyer loan commitments for investment purposes accounted for 4.4 per cent of all first home buyer commitments.
The HomeBuilder program, which offers grants of $25,000 to help construct or renovate a property, is also contributing to an increasingly febrile market.
“Since the HomeBuilder grant was introduced in June 2020, there have been record rises in the value of construction loan commitments,” ABS head of finance Katherine Keenan said.
“Loan applications made late in 2020—prior to the reduction of the HomeBuilder grant on 1 January 2021—contributed to the strong rise in January’s construction loan commitments of 15.7 per cent.”
The value of new loan commitments to owner occupiers rose 10.9 per cent, the largest monthly increase since August 2020.
Owner-occupier first home buyer loan commitments accounted for 36.5 per cent of all owner occupier commitments.
Despite 6.5 million Victorians being put through two lockdowns in the lead up to January, the value of new loan commitments to investors also rose 12.9 per cent in the state across the month.
ANZ economist Adelaide Timbrell said Victoria has continued to play catch-up after its lockdown, with its total new lending moving from 15.2 per cent year on year in December to 29.7 per cent year on year in January.
“Government support is adding to the momentum of housing lending, with stamp duty concessions in Victoria, the first home owner deposit scheme and other first home owner concessions all reducing the initial cost of home purchases.
“Low rates—including an outlook of continued low borrowing costs—are fuelling the housing market more than other parts of the economy,” Timbrell said.
Loans to owner-occupiers for the construction of a new dwelling in the three months to January 2021 compared to the same time last year has tripled in Western Australia, up 221.7 per cent and more than doubled in Queensland to 164.9 per cent.
The Northern Territory recorded a 160.3 per cent boost while Tasmania and Victoria also recorded spikes of around 100 per cent.
HIA economist Angela Lillicrap said investors were now returning but remained more active in the market for established dwellings.
“The value of lending to investors increased by 17.6 per cent in the three months to January 2021 from the previous quarter.
“Low interest rates, rising house prices, higher savings and a demographic shift in demand towards detached housing and regional areas should ensure ongoing demand,” Lillicrap said.
National house prices grew slightly by 0.9 per cent in January to surpassed pre-Covid levels by 1 per cent, and be 0.7 per cent higher than the previous September 2017 peak.
Article Source: theurbandeveloper.com
2020 saw 6,777 interest rate cuts across Australia’s home loan institutions
From 1 January to 31 December there were 6,777 cuts to home loans, with an average cut of -0.30%, according to Canstar’s database.
- 880 cuts to variable rates for owner occupiers, with an average cut of -0.21%
- 2,455 cuts to fixed rates for owner occupiers, with an average cut of -0.33%
- 764 cuts to variable rates for investors, with an average cut of -0.21%
- 2,678 cuts to fixed rates for investors, with an average cut of -0.32%
Over the same period there were 535 home loan rate increases, with an average increase of 0.20%.
On 1st January 2020 the average variable rate for owner occupiers paying principal and interest was 3.73% (80% LVR). Today that rate is 3.32% The lowest variable rate was 2.69% and it is now 1.99% (80% LVR) or 1.77% (60% LVR).
On the 1st January 2020 the average 3-year fixed rate for owner occupiers paying principal and interest was 3.15%. Today the average 3-year fixed rate is 2.30%. The lowest 3-year fixed rate was 2.69% and it is now 1.89%.
Savings interest rates
From 1 January to 31 December Canstar recorded:
- 529 cuts to savings, with an average cut of -0.18%
- 262 cuts to regular savings accounts, with an average cut of -0.19%
- 267 cuts to bonus savings accounts, with an average cut of -0.17%
On 1st January 2020 the average regular savings account rate was 1.12%. Today that rate is 0.43%. The maximum rate was 2.65% and it is now 1.75% (available for 4-months).
On 1st January 2020 the average bonus savings account rate was 1.47%, now just 0.75%. The maximum rate was 2.25% and it is now 1.35%.
Article Source: www.urban.com.au
Home-buyer confidence at an all-time high
More than two-thirds of respondents in a recent survey believe that the conditions are right to purchase a home – a level of confidence not seen since the onset of the pandemic.
Finder’s latest consumer sentiment survey, which involved a nationally representative sample of more than 20,300 respondents, found that 67% of Australians feel that now is a suitable time get on the property ladder, up from 42% last April.
This marked the first time that home-buying optimism has reached this level since the financial comparison site started tracking the metric in May 2019.
Confidence was highest in Adelaide, where 77% of those polled thought now is the right time to buy a home. This was followed by Melbourne’s 70%, Brisbane’s 69%, Perth’s 67%, and Sydney’s 59%. Numbers were not available for Canberra, Darwin, and Hobart.
Those expecting house prices in their areas to “significantly increase” also hit an all-time high of 19%, climbing from just 5% in September last year.
Meanwhile, respondents who anticipate property values to “somewhat increase” rose to 44% from a low of 18% back in April.
Graham Cooke, insights manager at Finder, said that the recent spike home-buyer optimism was a good indication of economic recovery.
“This rebound in buyer confidence is indicative of increased economic activity over the past few months, along with an optimistic outlook for 2021,” he said. “Not only did the Australian government do a better job than most at restricting the spread of COVID-19, but federal and state economic support measures helped prop up the property market.”
Cooke said that property prices in every capital city, expect for Melbourne, have reached a higher level compared to the same time last year, adding that he expected “this trajectory to continue,” especially with 86% of economists in a separate Finders survey predicting a full recovery of national house values this year.
However, Cooke advised prospective buyers to carefully consider the pros and cons “before taking the plunge in the current market.”
“Low interest rates and government assistance packages like the First Home Loan Deposit Scheme put buyers in a strong position. The potential removal of stamp duty in NSW will be another boon for buyers and may spread to other states,” he said. “If you’re thinking about dipping your toe in the market this year, make sure you have a strong credit history, and shop around before signing up for a home loan.”
Article Source: www.brokernews.com.au
- Property Management6 years ago
7 Common GST Mistakes On Property
- Residential4 years ago
Ipswich Proves Frontier In Affordable Housing
- Infrastructure3 years ago
Decision on horizon for key marina section of huge North Harbour development at Burpengary
- Market Place3 years ago
How to make $1 million ‘flipping’ houses
- Developments3 years ago
Brisbane and interstate investors drawn to up-and-coming King Street precinct
- Market Place3 years ago
Moreton Bay makes top 10 list of places to invest in property
- Brisbane2 years ago
Queensland leads the way in market recovery
- Developments4 years ago
Caboolture West could be Australia’s next major regional centre