Looming Crisis in Queensland’s Rental Market as Investors Prepare to Flee Housing Tax Grab
By Shannon Molloy | News Editor
New research shows a huge number of property investors are preparing to exit the already stretched Queensland rental market thanks to the government’s “ridiculous” housing tax.
Contentious changes to how the state’s bean counters calculate land tax – which from next year will be based on the value of assets held anywhere in the country, not just in the Sunshine State – have sparked warnings of even more pain to come for struggling tenants.
The new tax comes on the back of a reduction in supply coupled with a sharp uptick in demand on the back of high interstate migration means prices have skyrocketed, particularly in southeast Queensland.
A wide-reaching survey by the Property Investment Professionals of Australia found that the past two years have seen an exodus of landlords in the state during the latest boom.
PIPA chair Nicola McDougall said 45% of investors with assets in Queensland sold at least one property in that time, and mostly to owner-occupiers.
The sell-up means that almost 30% of all rental dwellings were stripped from the supply pool, equating to potentially 160,000 homes, based on Census data analysis by PIPA.
Queensland is already in the grips of a severe rental crisis, with a vacancy rate of 0.7% in Brisbane.
“The number one reason why investors sold was due to the positive selling conditions at the time, followed by [a desire] to reduce their total borrowings, and changing tenancy legislation making it too costly or hard to manage,” Ms McDougall said.
She said there are signs of “more rental stress for tenants to come”, with the research revealing 19% of investors are now considering selling up in the next 12 months.
“The survey provided investors with more than a dozen potential reasons why they may sell a property in the next year – and the Queensland land tax was the top reason with nearly 31% of investors,” Ms McDougall said.
“If the percentage of investors who are considering selling winds up doing so, then we are going to see even higher rents as well as a sharp increase in homelessness – especially in Queensland.”
Annastacia Palaszczuk has defended the housing tax.
Premier Annastacia Palaszczuk this week joined Treasurer Cameron Dick in defending the housing tax, insisting it was about making interstate landlords pay their fair share.
But Mr Dick was earlier this month forced into an embarrassing correction of his earlier claim that only landlords from other states would be pinged by the tax grab – conceding that local investors will also be impacted.
Hayden Groves, the president of the Real Estate Institute of Australia, said demonising investors ignores the important role they play in providing homes for millions of people.
“It is astonishing that policy makers still don’t seem to understand that rental market challenges derive from supply shortages not greedy landlords,” Mr Groves said.
On top of that, he said “anti-investor proposals” ignore the longer-term consequences of housing supply, which will impact heavily on the very people that are intended to support.Brisbane’s rental market is facing a looming disaster as landlords prepare to flee.
Groups like PIPA have been warning for several years that a rental crunch was coming, initially sparked by restrictive policies on investors by the Australian Prudential Regulation Authority, Ms McDougall said.
Signs of a dramatic undersupply were also evident years ago but ultimately ignored, she said.
Across Australia, the survey indicated up to 270,000 rental properties have disappeared from the private market over the past two years, she said.
Further disincentives to invest in real estate via “ridiculous” policies, like the land tax hike in Queensland, will deliver pain felt entirely by Australians who rent.
“It is clear that investors are sick and tired of being treated appallingly by policymakers who continually believe that they are an endless supply of revenue for their coffers,” she said.
“But when nearly 270,000 rental dwellings disappear in just two years – because governments thought private investors would forever shoulder the burden of providing rental housing while being taxed and taxed some more – well, have we got news for you.”