Markets 
David Crisafulli is unconvinced the federal government’s overhaul of property taxes will improve the housing crisis in Queensland but economists and leading financial figures forecast the changes will be most acute in the Sunshine State.
Negative gearing will be limited to new builds and the capital gains tax concession reduced as key pillars of a federal budget aimed squarely at improving affordability for first home buyers.
High population growth has crunched housing affordability in Queensland, with values in Brisbane soaring 84 per cent in five years, according to property researcher Cotality.
The sharp spike is the equivalent of adding about $509,000 to a home, and compares to the 5.8 per cent rise in Melbourne over the same period – or about $45,000 in gained value.
Over that time, the gap between investor and first homebuyers has widened, according to ABS data released this week. About 41 per cent of all loans were to investors in the March quarter, which closely mirrored the national average, while loans to first home buyers fell to 16 per cent – about 1.5 per cent below the national figure.
The Albanese government’s divisive changes to negative gearing and capital gains is intended to improve affordability by encouraging investment in new builds and allow first homebuyers and owner-occupiers to better compete with investors.
But Premier David Crisafulli said he had doubts about the changes, which federal LNP counterpart Angus Taylor has already vowed to repeal if the Coalition forms government.
“I’d like to see the modelling,” Crisafulli told reporters on Friday.
“Any change in tax … has to be about incentivising supply, surely, because if you’re not encouraging people to increase supply, well then no change in tax will deliver what you want, and that is the ability for a young person to own a home.”
Experts argue the impacts will be significant, but don’t agree on the effectiveness of the reforms improving the issue.
Independent economist Saul Eslake said an issue with housing trends in Queensland is more than 80 per cent of money lent to investors is for the purpose of buying established homes rather than new builds.
“That does nothing to increase housing supply because the housing already exists,” he told this masthead.
“What it does do is put further upward pressure on the price of houses that already exist – if investors weren’t doing it, then there would be less demand for those properties.
“And, secondly, by definition when an investor buys an established property, he or she is out-bidding one or more would-be owner-occupiers and, ultimately, is therefore adding to the demand for rental housing because every time an investor buys a house or flat that already exists, that’s a house or flat that someone who would like to own it can’t.”
Eslake says this squashes arguments the changes will only lead to a further squeeze on the rental market because, ideally, middle income workers will be able to buy their own home rather than compete for a lease.
“People seem to have trouble grasping that,” the respected economist said.
But veteran fund manager Geoff Wilson, the founder of Wilson Asset Management, said the high adoption rate of negative gearing in Queensland meant investors were more likely to abandon the market and lead to prices falling.
Nearly 80 per cent of Queensland investors use negative gearing, according to industry lobby Property Council, compared to about 50 per cent nationally.
“It’ll probably have a significantly higher impact on the Queensland property market than any other state property market,” he told this masthead.
Cotality head of research Gerard Burg said the extraordinary price growth in Queensland is due to the imbalance between supply and demand, which the tax reforms are aiming to correct.
“Queensland has led population growth across the country by a state and that has really tightened the market enormously,” he said.
“It’s people looking for a roof over their heads, but also investors see that as a huge opportunity when there’s a lot of demand for property and values are rising rapidly and investors jump in to get their share of it.
“When we take a look at the changes, what this really does is shift the focus of where investors are likely to be concentrated, so it significantly reduces the incentives for investing in existing stock.
“But the fact that negative gearing will be retained for newly constructed homes does suggest that there might be some encouragement there.”
Start the day with a summary of the day’s most important and interesting stories, analysis and insights. Sign up for our Morning Edition newsletter.
James Hall is the News Director at the Brisbane Times. He is the former Queensland correspondent at The Australian Financial Review and has reported for a range of mastheads across the country, specialising on political and finance reporting.Connect via X or email.From our partners
Read the full article here
