ADDITIONAL TAXES WILL SEE RENTAL CRISIS WORSEN

September 8th,2022

The Real Estate Institute of Australia (REIA) has slammed the Queensland State Government’s proposal to introduce an annual tax on investors who own property outside of Queensland.

REIA President, Mr Hayden Groves said the proposal shows a total lack of understanding of our private housing market and the important role investors play in providing homes for millions of Australians.

The move coincides with the Greens’ recent proposal of a rent freeze across the country.

Mr Groves said the Queensland changes to land tax will urge investors to quit their property assets in that state and look elsewhere to invest.

“It is astonishing that policy makers still don’t seem to understand that rental market challenges derive from supply shortages not greedy landlords.

“Landlords are responding to the market conditions and they cannot artificially create a parallel market. Just like petrol prices or that of lettuces,” he said.

“You cannot treat investment in housing differently to that of other asset classes without significant consequences.

“Residential property investors have seen marginal rental increases over many years and often deal with negative returns.

“To put it in perspective, it has only been since September 2021 that annual rent increases have been greater than 2 percent annually. Prior to that there has not been an annual increase above 2 percent since December 2014. For the period June 2020 to December 2020 and for a twelve-month period in 2017, annual rents went backwards.

“Brisbane’s twelve month rent increase of 13 percent is a demand driven outcome and comes from a migration influx which, as it’s likely to continue, makes introducing new land taxes even more foolish.”

Mr Groves said the consequences of these supply-crushing proposals, if implemented, would be similar to when in 1985 the then Labor Government ceased negative gearing only to reinstate it in 1987.

“In Brisbane back then, rents increased at an annual rate of over 4% from June, 1987 to September, 1991 peaking at a 12.1% increase in the year to December 1989,” he said.

Mr Groves concluded that anti-investor proposals ignore the longer-term consequences of housing supply which will impact heavily on the very people that are intended to support.