The latest data from the Queensland Department of Environment and Resource Management (ERM) confirms that (mean) average house prices in the Gold Coast have risen to over $600,000.
Data for 2,094 sales in the Gold Coast over the six months to 30 June 2010 showed an average (not median) house price of $600,110, an increase of 4.2 percent over the previous six months and 12.2 percent from the lowest point in the GFC cycle (the six months to 30 June 2009 with an average of $534,924).
The latest data is confirmation that house prices have recovered from the fall experienced during 2008 and into early 2009.
The curious thing about the Gold Coast’s housing market is that despite very low sales volumes over the past 12 months, average house prices have risen by 12% in that time.
Normally, rising house prices reflect stronger demand and rising sales volumes. This is a fundamental law of demand push inflation.
The Government data indicates a chronic under-supply of new and existing housing to meet even less than average demand. The same situation does not apply to units, where prices are still falling - to an average of $476,614 in the June 2010 half year.
The current level of house sales on the Gold Coast is the lowest since the 1981-82 recession. It has affected real-estate agents, conveyance lawyers, removalists and all those businesses that rely on property sales.
Sunday, October 3, 2010
Sunday, August 1, 2010
Where Would We Be Without Immigration?
With interstate migration into Queensland down to pre-1985 levels, overseas migration and natural increase is propping up Queensland’s population growth of 117,000 per annum.
The Federal Government forecasts that whilst natural increase will continue to grow, overseas migration will fall by some 120,000 over 2011-13 in Australia. The effect of this on Queensland is likely to be a fall of 25,000-30,000 in net population growth per annum.
Interstate migration to Queensland has moderated since 2003, and is unlikely to increase over the next few years because of the relative price of housing between Brisbane, Sydney and Melbourne (Victoria now being the more affordable state) and the generally weak economic growth in Australia.
Queensland’s economy is driven by coal mining and population growth, the latter affecting the major cities in particular. Declining population growth will have a negative effect on Queensland’s economy, particularly in South-East Queensland.
Does this kind of commentary interest you? Then visit www.midwoodaustralia.com to gain access to a 33 year historical library of Queensland facts and figures.
The Federal Government forecasts that whilst natural increase will continue to grow, overseas migration will fall by some 120,000 over 2011-13 in Australia. The effect of this on Queensland is likely to be a fall of 25,000-30,000 in net population growth per annum.
Interstate migration to Queensland has moderated since 2003, and is unlikely to increase over the next few years because of the relative price of housing between Brisbane, Sydney and Melbourne (Victoria now being the more affordable state) and the generally weak economic growth in Australia.
Queensland’s economy is driven by coal mining and population growth, the latter affecting the major cities in particular. Declining population growth will have a negative effect on Queensland’s economy, particularly in South-East Queensland.
Does this kind of commentary interest you? Then visit www.midwoodaustralia.com to gain access to a 33 year historical library of Queensland facts and figures.
Sunday, May 16, 2010
Resources Super Profits Tax (RSPT)
Did you know?
1. The 40% tax applies only to profit earned over and above the long term bond rate, currently 6% return on assets per annum, but could be as high as 10% per annum
2. The current royalty regime will continue, but all payments made will be credited by the tax office
3. Normal company tax will be credited against RSPT in the year payable
4. In most years, there will be no RSPT payable; in fact where there are losses, they will be “carried forward” to offset future RSPT liabilities
5. The objective is to tax only “windfall” profits generated by boom commodity prices, so it is based on the age old taxation principle of ability to pay. In “normal” years, little or no RSPT would be payable, nor would royalties be payable.
1. The 40% tax applies only to profit earned over and above the long term bond rate, currently 6% return on assets per annum, but could be as high as 10% per annum
2. The current royalty regime will continue, but all payments made will be credited by the tax office
3. Normal company tax will be credited against RSPT in the year payable
4. In most years, there will be no RSPT payable; in fact where there are losses, they will be “carried forward” to offset future RSPT liabilities
5. The objective is to tax only “windfall” profits generated by boom commodity prices, so it is based on the age old taxation principle of ability to pay. In “normal” years, little or no RSPT would be payable, nor would royalties be payable.
Monday, May 3, 2010
The Henry Tax Review and Property
Property issues remain virtually untouched in the Henry Tax Review, released on 2 May; no change to negative gearing or capital gains tax (although Henry did recommend a national land tax including the family home, which the Government dismissed).
The Report recommends that COAG meetings review development zoning procedures that inhibit affordable housing. The issue arose out of the National Rental Affordability Scheme (NRAS), where out-dated zoning densities often restrict development to low density in otherwise high density areas, which have infrastructure. The Government has not taken up these issues from the Report. It is doubtful whether COAG is the most suitable vehicle to decide these issues. The NRAS scheme needs to be extended beyond its forecast two year horizon if any real progress is to be made in affordable housing.
The Report could have done a lot more to encourage investors to build residential investment property, because the returns aren’t that attractive, even allowing for depreciation allowances and negative gearing. Issues such as tax credits could have been raised in the Report, along the lines of the National Rental Affordability Scheme (NRAS), which is only a very short run program (2-3 years). The high costs of land tax also act against afforability for larger developers holding multiple land parcels.
There has been a dearth of investment in rental accommodation throughout Australia over the past ten years. This is because face rents rarely exceed a 5% yield per annum, and net rents, 3% per annum before interest. Unless an investor has a substantial separate income for negative gearing, the benefits are small. And investment in residential rental accommodation is quite risky. Pre-interest and tax returns should really be in the order of 15-20% per annum. Small investors just don’t achieve that level of return because they don’t have any economies of scale.
The Report recommends that COAG meetings review development zoning procedures that inhibit affordable housing. The issue arose out of the National Rental Affordability Scheme (NRAS), where out-dated zoning densities often restrict development to low density in otherwise high density areas, which have infrastructure. The Government has not taken up these issues from the Report. It is doubtful whether COAG is the most suitable vehicle to decide these issues. The NRAS scheme needs to be extended beyond its forecast two year horizon if any real progress is to be made in affordable housing.
The Report could have done a lot more to encourage investors to build residential investment property, because the returns aren’t that attractive, even allowing for depreciation allowances and negative gearing. Issues such as tax credits could have been raised in the Report, along the lines of the National Rental Affordability Scheme (NRAS), which is only a very short run program (2-3 years). The high costs of land tax also act against afforability for larger developers holding multiple land parcels.
There has been a dearth of investment in rental accommodation throughout Australia over the past ten years. This is because face rents rarely exceed a 5% yield per annum, and net rents, 3% per annum before interest. Unless an investor has a substantial separate income for negative gearing, the benefits are small. And investment in residential rental accommodation is quite risky. Pre-interest and tax returns should really be in the order of 15-20% per annum. Small investors just don’t achieve that level of return because they don’t have any economies of scale.
Thursday, April 22, 2010
Gold Coast Land & Packaged Housing Market Update (PRODAP Report)
The latest PRODAP Report, which I author and my team conduct research for, confirms sales of vacant land and new packaged housing in the Gold Coast fell by a marginal 8% in the December 2009 quarter, down from 510 to 468 sales. Therefore, it's safe to say that demand over the latter half of 2009 remained relatively steady. But average (not median) land prices have also fallen by 3.5% in the March 2010 quarter, from $307,542 to $296,660, a positive for new house and land buyers.
The Gold Coast land and packaged housing market has slowed at the lower priced end due to the end of the Federal “boosts” given to first home buyers, but the effect has been very marginal. There is now more sales activity spread across the middle and higher priced end.
Aggregate land and packaged housing stock levels of 1,404 lots represent approximately 16 months supply, which is not high given normal lead times for land development.
New production forecasts for 2010 by Gold Coast developers total almost 4,000 lots and houses. This level of production is equivalent to almost twice the level of current annual demand, indicating that supply should not be a problem in the year, given a responsible level of development funding. However, the supply of stock can change quickly when demand recovers to normal levels.
Medium to high density sites are often economically constrained from supporting affordable housing by the allowable densities specified in the Town Plan. These densities in many cases were set 30-40 years ago when site coverage and building separation were paramount. Most had 40% site coverage, which restricts density and therefore affordability. The Gold Coast City Town Plan is scheduled for renewal by 2012, and if history repeats, this could extend into 2013-14, up to four years away. The current policy is to encourage affordable housing, but densities need to be more flexible and negotiable.
The PRODAP Report is published quarterly and contains a database of sales and stock levels on the Gold Coast, in addition to market analysis & forecasts. See www.prodap.com for more information.
The Gold Coast land and packaged housing market has slowed at the lower priced end due to the end of the Federal “boosts” given to first home buyers, but the effect has been very marginal. There is now more sales activity spread across the middle and higher priced end.
Aggregate land and packaged housing stock levels of 1,404 lots represent approximately 16 months supply, which is not high given normal lead times for land development.
New production forecasts for 2010 by Gold Coast developers total almost 4,000 lots and houses. This level of production is equivalent to almost twice the level of current annual demand, indicating that supply should not be a problem in the year, given a responsible level of development funding. However, the supply of stock can change quickly when demand recovers to normal levels.
Medium to high density sites are often economically constrained from supporting affordable housing by the allowable densities specified in the Town Plan. These densities in many cases were set 30-40 years ago when site coverage and building separation were paramount. Most had 40% site coverage, which restricts density and therefore affordability. The Gold Coast City Town Plan is scheduled for renewal by 2012, and if history repeats, this could extend into 2013-14, up to four years away. The current policy is to encourage affordable housing, but densities need to be more flexible and negotiable.
The PRODAP Report is published quarterly and contains a database of sales and stock levels on the Gold Coast, in addition to market analysis & forecasts. See www.prodap.com for more information.
Sunday, January 17, 2010
Sustainable Planning Act Permits “Outsourcing”
The first of many breakthroughs in local government outsourcing of planning issues has occurred in the new Sustainable Planning Act for Queensland, albeit on a limited scale.
The Act came into effect throughout Queensland on 18 December 2009. For development applications which are “as of right” and for which technical assessment is clear cut, they will be categorised as 'compliance assessment'. Many code assessable development applications, which are deemed compliant assessment, will be able to be outsourced to a suitable qualified entity.
It is likely that Councils will soon call for nominations from Planning Consultants to become accredited qualified entities.
The Act came into effect throughout Queensland on 18 December 2009. For development applications which are “as of right” and for which technical assessment is clear cut, they will be categorised as 'compliance assessment'. Many code assessable development applications, which are deemed compliant assessment, will be able to be outsourced to a suitable qualified entity.
It is likely that Councils will soon call for nominations from Planning Consultants to become accredited qualified entities.
Brisbane House Prices Recover to Pre-GFC Levels
The latest data from the Queensland Department of Natural Resources and Water confirms that (mean) average house prices in Brisbane have returned to their pre-GFC level.
Average house prices have recovered in the December 2009 half year to $560,000, which is 10 percent higher than the average of $511,223 recorded in the June 2009 half year.
The new data follows a fall of 10 percent, which occurred from the pre-GFC peak in December 2007 to the trough ending in June 2009. The fall in average house prices has now been matched by the recovery of similar magnitude.
However, sales volumes have not improved in the latest six month period and are still at their lowest levels since 1980.
This reflects the ‘credit squeeze’ for residential housing finance, despite the effects of the first home buyers grant. Credit continues to be a serious problem in housing and low sales volumes have a negative impact on associated industries, such as real estate agencies, removalists, valuers, solicitors, financers and the furniture/white goods/electrical sectors.
This blog is copyright to Midwood Queensland Investment Report.
Average house prices have recovered in the December 2009 half year to $560,000, which is 10 percent higher than the average of $511,223 recorded in the June 2009 half year.
The new data follows a fall of 10 percent, which occurred from the pre-GFC peak in December 2007 to the trough ending in June 2009. The fall in average house prices has now been matched by the recovery of similar magnitude.
However, sales volumes have not improved in the latest six month period and are still at their lowest levels since 1980.
This reflects the ‘credit squeeze’ for residential housing finance, despite the effects of the first home buyers grant. Credit continues to be a serious problem in housing and low sales volumes have a negative impact on associated industries, such as real estate agencies, removalists, valuers, solicitors, financers and the furniture/white goods/electrical sectors.
This blog is copyright to Midwood Queensland Investment Report.
Gold Coast House Prices Recover to Pre-GFC Levels
The latest data from the Queensland Department of Natural Resources and Water confirms that (mean) average house prices in the Gold Coast have returned to their pre-GFC level.
Data for 2,029 sales in the Gold Coast over the six months to December 2009 showed an average house price of $575,739, an increase of 7.6 percent over the lowest point in the GFC cycle of $534,924 recorded in the June 2009 half year.
The latest data is a positive sign that average Gold Coast house prices have recovered from the fall experienced during 2008 and into early 2009.
The previous high of $580,670 was recorded in the December 2007 half year and with the average now at $575,739, average prices have all but returned to their previous levels experienced in 2007.
But this is not so with sales volumes, which continue to wallow around the record low volumes experienced in the 1982-83 recession.
Low sales volumes reflect a general difficulty in purchasers being able to obtain finance, even with the Federal government’s first home buyer’s subsidy.
The impact on the local economy has been most severe on real estate agents, removalists, valuers, solicitors and financiers as well as the furniture and white goods/electrical industry, which revels in high property turnover.
Sales turnover is a better measure than prices as a means of monitoring the general health of the housing industry.
Data for 2,029 sales in the Gold Coast over the six months to December 2009 showed an average house price of $575,739, an increase of 7.6 percent over the lowest point in the GFC cycle of $534,924 recorded in the June 2009 half year.
The latest data is a positive sign that average Gold Coast house prices have recovered from the fall experienced during 2008 and into early 2009.
The previous high of $580,670 was recorded in the December 2007 half year and with the average now at $575,739, average prices have all but returned to their previous levels experienced in 2007.
But this is not so with sales volumes, which continue to wallow around the record low volumes experienced in the 1982-83 recession.
Low sales volumes reflect a general difficulty in purchasers being able to obtain finance, even with the Federal government’s first home buyer’s subsidy.
The impact on the local economy has been most severe on real estate agents, removalists, valuers, solicitors and financiers as well as the furniture and white goods/electrical industry, which revels in high property turnover.
Sales turnover is a better measure than prices as a means of monitoring the general health of the housing industry.
Wednesday, January 6, 2010
Queensland property: Projections for 2010
• The population in Queensland will grow by 110,000 in 2010, equivalent to 48,000 additional dwellings but we will only see 30,000 new dwellings constructed. This downturn in new dwelling commencements will affect employment and all ancillary industries such as finance, trades, white goods, electrical and furniture.
• Housing finance will be difficult to obtain and interest rates could rise a further 1.0% to 1.5% in the year.
• House prices will generally increase at less than the rate of inflation.
• Commercial property (except retail) will continue to perform poorly, with high vacancy rates and little or no capital growth.
• The regional areas of Toowoomba, westward to Chinchilla, Dalby, Argyle, and north to Hervey Bay, Gladstone and Rockhampton will perform better than the south-east in terms of price growth and dwelling construction.
• Housing finance will be difficult to obtain and interest rates could rise a further 1.0% to 1.5% in the year.
• House prices will generally increase at less than the rate of inflation.
• Commercial property (except retail) will continue to perform poorly, with high vacancy rates and little or no capital growth.
• The regional areas of Toowoomba, westward to Chinchilla, Dalby, Argyle, and north to Hervey Bay, Gladstone and Rockhampton will perform better than the south-east in terms of price growth and dwelling construction.
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