Queensland agents have reported a sharp drop in the number of interstate investors in the market, and are warning of a looming “catastrophe” on the horizon.
A number of properties that would typically attract investor interest were passed in at auction over the weekend, with agents also reporting an increase in investors looking to offload their Queensland properties.
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Ray White Marsden principal Avi Khan, whose business oversees more than 1000 rental properties from Brisbane to Logan, said the land tax, which comes into effect on July 1, was a nail in the coffin for many investors.
“It isn’t that they have just stopped inquiring, it is that current landlords are looking to sell,” he said.
“We will see catastrophic consequences if this is not addressed as investor stock is typically picked up by owner occupiers so not only will there be less rentals available, rents will go up even more across the remaining stock and that will make it even harder for people to save to buy a home.”
Mr Khan said one indicator of investor intention was the number of appraisals being sought by landlords.
“And for our business, that’s up about 15 percent,” he said.
“That’s an indication that they are looking to sell.”
It comes as the PIPA Annual Investment Survey 2022 revealed that a whopping 45.1 percent of investors had sold a property or properties in Queensland over the past two years – nearly double the number in NSW.
“Using the 2021 Census as the baseline of 553,432 private rental properties in Queensland, further analysis has found this equates to about 162,239 fewer rental properties – or a reduction in supply of nearly 30 percent in just two years in Queensland,” the report said.
A further 19 percent said they would consider selling property in the next year due to the new land tax, which will hit interstate investors with Queensland properties from July 1.
PIPA chair Nicola McDougall said that while there had been much conjecture about rental market pressures over the past year, it was clear that investors off-loading their properties were a big part of the reason for the undersupply.
She said 30.8 percent of survey respondents were thinking of selling their Queensland properties due to the looming land tax, which will slug interstate investors with properties interstate and in Queensland.
Changing tenancy laws (29.6%) and the threat of rental freezes (23%) were also among their top concerns.
The tax grab will see anyone with investment properties in multiple states slugged if the value of those properties exceeds the $600,000 threshold.
Harcourts Solutions agent Chris Stutz said the retreat of interstate investor interest has been swift.
“This land tax rule has made things even worse for interstate investors and people will start getting rid of investments which will have a huge hit on rents,” she said.
“If a property needs work, they will just get the tenants out and clean it up to get the most out of the market.
“I’ve had a few already, just in the past week, who have said they are just going to sell their investment properties and that leases won’t be renewed.
“They aren’t millionaires. They have maybe two properties and can’t afford to pay this enormous land tax bill.
“Interstate investors will either just sell up and park their money elsewhere or they will be forced to increase rents to cover the cost. It is certainly going to impact the rental market.”
Queensland is already in the grips of a crippling rental vacancy shortage, with renters, unable to find a vacancy, living in caravan parks, tents and cars.
Following a recent housing summit to address the crisis, the state’s planning laws will be changed to remove restrictions on people renting out granny flats.
Ray White Beenleigh agent Paul Penklis, who sold a three-bedroom house for $525,000 to a buyer relocating from Victoria, said there was only one interstate investor among the seven registered bidders.
“There has definitely been a drop off (in interstate investor interest),” he said.
“They just don’t want a huge land tax bill and they are also telling us that, with interest rates rising, they just aren’t getting the returns they used to.
“I’ve had three interstate investors tell me already that they are going to sell and that will make the shortage of rentals even worse, because they usually go to owner occupiers so what is there, the number will just get smaller and that will push prices up.”
ABS Census data shows that the number of renters in Queensland has almost doubled since 1996, up from 347,397 back then to 618,442 now.
According to SQM Research, Brisbane’s vacancy rate in August was 0.7%. It was even tighter in the regions.
The Real Estate Industry of Queensland has labeled the land tax “illogical” and the NSW government has labeled it “lazy policy”.