Chapter 1: What is the Queensland property tax grab and why is it significant?
it's the real estate podcast brought to you by anz home loans for financial well-beings and welcome to another episode of the real estate breakfast available on iheart radio every morning and also on spotify and apple and wherever you get your podcast from the weekend has arrived back again a saturday morning the 22nd day for october for 2022
a weekend of real estate, no doubt, all over Australia. And if you're doing anything around property, good luck in the challenge of either selling or buying or transacting with the paperwork if you're an agent, an auctioneer, even a lawyer. Sometimes lawyers work on the weekend even though they would never admit it. And remember, don't go to the local electrical shop to buy some light fittings.
And the belief that you know enough about electrical work, get a Sparky to do the job. I know it is a real hassle at the moment getting a contractor, especially with wait times. But trust me, it is better. than you croaking. Remember, no second chances if you get enough current passing through your body, which zaps out your heart.
Coming up in just a moment, we are going to be talking to Nicola McDougall about the Queensland tax grab and her story about how she helped overturn it. Informing you every morning from 6.30, seven days a week on The Real Estate Breakfast. And if you're celebrating your birthday today for the 22nd of October, I see you're celebrating with Jeff Goldblum, the actor. He is turning 69 years young.
And it was a pretty important day today back in 1962 with the Cuban Missile Crisis.
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Chapter 2: How have recent interest rate changes affected the property market?
US President John F. Kennedy addresses an American nation about Russian missile bases in Cuba and imposes a naval blockade. And that was 60 years ago today. It's your Saturday morning real estate breakfast. We talk with leading property commentators with analysis, predictions, forecasts and what's trending every morning from 6.30. It's the main centre forecast with PRD, selling smarter every day.
And let's have a look at your weekend weather on this Saturday morning. First we go to Sydney. Unfortunately, some showers to increase today, expecting a high of 25 degrees. In Melbourne, we are expecting the rain to ease today, a high of 19 degrees. In Brisbane, we're going to be splashing around in some rain. 23 is your forecast high.
And in Perth today, partly cloudy, but it should be mainly dry. And 24 is your forecast top. It's your weekday real estate breakfast with news, interviews and predictions every morning on The Real Estate Podcast. Well, on this Saturday morning, let's check in with her thoughts and comments with Nicola McDougall, property commentator.
Chapter 3: What impact did the proposed land tax have on property investors?
And a very good morning to you, Nicola. Welcome to the Real Estate Breakfast. Thank you for having me. Good to be here. been a while. In fact, the last time we spoke was three months ago. And since that time, we've had six rate rises. That's all unfolded. The market got spooked, but it's kind of holding steady, I guess, at the moment. Yeah, definitely.
Lots of change in the last three months for sure. We have had, you know, rapid increase in interest rates. And clearly we are starting to see more of a broad based softening in prices across the country. We are seeing, you know, some relatively significant, I guess, annual declines compared to where we were this time last year.
What's happening at the moment, though, I guess, is with that rapid increase in interest rates that we've seen, is that the borrowing capacity of many borrowers has been constrained significantly, certainly for investors.
Chapter 4: How did the community respond to the Queensland land tax proposal?
Not because they don't want to, because they actually can't, because interest rates have gone up so much and we are still seeing that three percentage point servicing buffer there that is being used. If you could buy at the moment, you certainly would, because the market is probably better for you as a purchaser than it was this time last year.
However, at the moment, we are starting to hear of many potential homebuyers and investors who are unable to access the finance to actually transact. Yeah, so unlike Liz Truss, the British Prime Minister, you'd have to say there's a bit of stability in the market. Yeah, definitely. I mean, you know, the problems here have been going on for more than 44 days. And look, are they problems? No.
I mean, the market conditions change. They change all the time for a variety of reasons. For those of us who have been doing this for a long time, they have changed very quickly. Normally, markets are quite slow to turn. Obviously, we had that massive increase in prices last year, and we are starting to see clearly prices going down. And then we throw into that mix the
The fact that interest rates have increased at the fastest level in decades, clearly there's some nervousness out there.
Chapter 5: What findings emerged from the investor sentiment survey?
However, I am certainly hearing from people on the ground that people have made peace with the change in interest rates that have happened so quickly.
And those educated homebuyers and investors recognise that the market conditions at the moment present far more opportunities for them to purchase well than this time last year, when unfortunately some people got a bit carried away and were prepared to pay above odds for properties. And the Queensland land tax, it got axed.
Now, you know a thing or two about what was happening there in Queensland. I do. In December last year, the Queensland government announced a policy which, in short... proposed to use the total value of a Queensland property owner's portfolio across the country to determine the land tax that they would pay to the Queensland government.
This had never seen the light of day before because it was ridiculous. However, it was proposed in December and most of us in the industry thought that either A, it was illegal or B, it just would never get through. Well, it did get through on the quiet in June. The REIQ had been very vocal about this from the very beginning.
Once the potential financial negative impact of this land tax or cash grab became more apparent, then obviously more and more people from the industry started to talk about it publicly.
At PIPA we every year for the last eight years have produced what we call our annual investor sentiment survey and every year we ask a standard set of questions to investors and we also ask questions that are about things that are happening at the moment. So this year we actually asked investors
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Chapter 6: What are the implications of the rental property shortage in Queensland?
if they had sold a property in the last two years, where they had sold a property, why they had sold a property. And we also asked investors what their selling intentions were for the year ahead and the reasons why they were considering selling. Now, that's a project that I manage every year. We secured 1,618 survey respondents from around the nation. So that was a significant sample size.
When the results landed on my desk, oh, where are we? Probably about a month ago or six weeks ago, it was clear. Oh, look, I was shocked. I sat there at my laptop and I could not believe what I was seeing. The data showed that 16.7% of investors nationwide had sold at least one investment dwelling in the last two years.
Of those dwellings, additional analysis showed that the majority, 66%, had been bought by home buyers, so they weren't going back into the investment pool. And of those investors who had sold, a staggering 45% of all of the investors who had sold at least one dwelling had already sold a property in Queensland.
We commissioned some additional analysis on that and that showed that there was potentially 162,000 investment properties that had been stripped from the Queensland market in the past two years. So needless to say, we spent quite some time preparing the report. We released it on a Thursday, which obviously it created almost like a national media frenzy, I suppose.
Chapter 7: How did the efforts to overturn the land tax reflect broader market trends?
So we released it on the Thursday and the Friday week later, the Queensland land tax was shelved. Well, it's a sort of a David and Goliath sort of a moment. You're never sure when you take on something like that, whether you will be successful. And clearly you were able to help in the decision to overturn it. I think it was just vital.
as well that I don't think, you know, this policy was clearly a bad one from the very beginning.
I think as well what was important with our survey was it actually created the first piece of research which actually showed why, well one of the main reasons why rental markets around the country have such a critical undersupply of properties because there was a lot of different theories that are being bandied about and no one really understood, you know, from the start of COVID to now, where the hell
of all the rental properties gone. You know, we've got critical undersupply across the nation, record low vacancy rates everywhere, especially here in Brisbane and in Queensland. Everyone was kind of clutching at straws about why has this happened when we've had nil population growth? Obviously, the international borders were closed.
Even without the land tax result, it was actually a very important piece of research to be produced to actually give some clarity on what the heck is happening out there, because at the moment we are seeing people that have nowhere to live and we're obviously seeing a massive increase in homelessness. All right. Well, plenty of passion coming through there, Nicola. We'll leave it there.
Thank you once again for coming on to the Real Estate Breakfast and enjoy your weekend. You too. Thank you so much for having me. We connect you to the best real estate information across Australia. The Real Estate Podcast.
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