Affordability, yield and a return to stamp duty concessions make now the time to buy in Queensland
Queenslanders looking at buying properties are now perfectly placed to take the plunge, according to a recent release by RP Data. The nationwide Buy vs. Rent report uncovers 238 suburbs across Australia where average mortgage repayments are lower than the median rent. Of the 238, Queensland is by far the best represented, with 84 suburbs making the list, 16 of which are in Brisbane and 68 in regional towns. That means the state accounts for a staggering 35% of the total suburbs. It’s way ahead of New South Wales, which featured 54 times on the list.
RP Data’s research director Tim Lawless believes a 5.9% fall in capital city home values since October 2010 has played a part in the favourable affordability numbers.
“With lower mortgage rates, tight rental markets resulting in some rental increases and lower home values, many buyers may see now as a good time to either re-enter the market or buy their first home,” Lawless says.
Lower mortgage rates mean buyers are happy, and none more so than Queensland property investors. Properties are regarded as affordable, command great weekly rent and are unlikely to cause vacancy issues in the current tight environment.
New home sales bounce back
The latest New Home Sales report by the Housing Industry Association (HIA) showed a nationwide decline in new home sales of 5.6% for July, with the states suffering the biggest declines WA (14.4%), SA (8.9%), NSW (6%) and Victoria (4.6%). The average could have looked worse though, if not for Queensland standing alone in the black, bucking the trend with a rise of 11.1%.
HIA chief economist Harley Dale says the results are positive for those looking to get into the property market soon. “Now is a good time to build a home,” he says. “Interest rates are lower, it’s a very competitive market, and there is less pressure on skilled labour availability.”
However, Dale says Queensland’s positive activity may reflect more of a bounce from the bottom than a great leap forward.
“Year-on-year, Queensland’s numbers are still down about 30%,” he says. “However, the July results are encouraging and we think over the course of the current financial year, we will get a recovery and more growth in new home building.”
Concession seekers to return
A drop in the number of house sales over the June quarter has not affected prices, according to the latest median house price report by the Real Estate Institute of Queensland (REIQ).
REIQ CEO Anton Kardash believes the slowing of settlements indicates homebuyers were waiting for the reinstatement of government incentives, which came into play on July 1.
“The state government introduced legislation into parliament in mid- May to reinstate the Principal Place of Residence concession on stamp duty this year,” Kardash says. “[This] meant homebuyers, who were not first-timers or investors, could save up to $7,000 from July 1, so it is little wonder that many decided to delay their purchases until after that date.”
Kardash believes the state’s property market fundamentals remain sound, but the key to improvements would be confidence in the economy.
“We believe the market will eventually start to hit its stride in a more vigorous manner due to pent-up demand, population growth and the ongoing mining boom putting pressure on real estate,” he says.
