House building grinds to a halt on the Gold Coast
Stamp duty backflip
The Queensland government wins the Australian record for tax backflipping by reneging on a promise to do something serious about residential stamp duties. Instead, stamp duties on the primary place of residence will increase across all price groups from August 1. For many this will mean paying twice as much duty next time they buy a Queensland property. Agents expect fewer resales as a result.
Grants barely touch the sides
The Queensland Government has also announced a $10,000 grant to anyone who buys a new home under $600,000 for six months from August 1 this year. But unless these people are first-home buyers or investors they will be paying the additional stamp duty. Upgraders – who make up close to half of the market – are at best likely to break even if they buy a new home between now and January 31, 2012.
Buyers deferring contracts
In a related story, Queensland builders are reporting that buyers are cancelling and deferring contracts. But industry sources say that these buyers could be in for a rude shock, with cancelled contracts not eligible for the $10,000 grant if re-signed after August. In fact, all Queensland home owners – and especially those trying to sell – could be in for a rude shock come the 1st of August. A bigger shock awaits us all come February 1, 2012.
Meagre discount on developments
Meanwhile, every developer is trying to attract attention by offering, effectively, a 2% discount on the price of their new dwellings. Although the initial response has been encouraging, one wonders if it can last. As one property analyst, who wished to remain anonymous, quipped: “If Myer was having a 2% discount sale in about a month’s time, you won’t really plan your diary around that event. Even less so if it was going to now cost you twice as much to get to the sale. But if you had already made plans to buy something from a department store, you would most likely change your schedule and take the discount, little as it may be.”
Gold Coast in trouble
Just one in seven dwellings approved on the Gold Coast is actually being built. This is against a typical 75% completion rate. Yet Gold Coast mayor Ron Clarke denies that there is anything wrong, citing that net employment has increased on the Gold Coast over the last 12 months and claiming that winning the 2018 Commonwealth Games bid will fix any issues. That assumes that there is anyone left with a job on the Gold Coast in seven years’ time.
Incentives to sell well
But there is some good news. Real-estate agents will now be able to set their own fees when it comes to buying and selling Queensland property. Gone are the days of agents getting you the fastest price – a seller will soon be able to incentivise a real-estate agent to get the most for the property. Deregulation will essentially allow the market to determine price rather than the government, which is always a good thing.