Hotspotting
CoreLogic is one of Australia's leading sources of data on residential real estate matters, although increasingly overshadowed by other, smarter data organisations like PropTrack. CoreLogic has lots of statistics about housing markets but when it comes to analysis and commentary, CoreLogic is very often a source of illogic. Their problem, like so many companies that comment on Australian housing markets, is that they employ economists to analyse real estate and the outcome very often is kindergarten analysis. Here’s a recent example: According to , property markets outside the capital...
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Perth is moving into a new phase in its property boom, with more and more buyers opting for units as houses become more and more expensive. The latest sales data shows that the strongest markets in Perth are well-located locations with a major presence of attached dwellings. While the most popular house markets for home buyers and investors (mostly those at the affordable end of the market) are a little less buoyant than earlier in the Perth up-cycle, the focus is switching to affordable units. Perth started this boom with a reputation as the most affordable capital city housing market. After...
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Adelaide’s property market, one of the nation’s strongest in the past two years, has strengthened further recently. ales volumes shows that market activity in the June quarter was the highest for Greater Adelaide since mid-2022. The June Quarter sales levels represented a 25% increase on the March Quarter and were 10% higher than the same time last year. This is despite the reality that listings of homes for sale across Adelaide are the lowest at any time in the past 15 years, according to SQM Research figures. This continues Adelaide’s track record as a market with consistently...
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One of the greatest misconceptions in the housing market is that property investors are the people who cause property prices to rise. The evidence confirms that this is a major piece of misinformation but some sections of politics and news media love to perpetuate this fiction. And, as an extension, use it as justification for advocating the end to negative gearing. Some people appear to believe that eliminating negative gearing tax benefits will fix all the problems in the property market: rising prices, housing affordability generally, the shortage of new homes, the rental crisis, pretty...
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The trend we call the Exodus to Affordable Lifestyle is among the most powerful forces impacting real estate markets across Australia. It’s a trend that been around for at least the past 10 years, with more and more residents of the biggest cities relocating to smaller cities or regional areas in search of a different and more affordable lifestyle, empowered by technology which allows many people to work remotely. It was NOT created by the Covid lockdowns. It was under way long before Covid appeared in 2020 and it continues to have considerable momentum now that we are well beyond the...
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Top economists are unanimous in believing Australia's housing market is in crisis, according to a new poll. And I have to say, Wow, we had to go to a group of “top economists” to achieve that startling revelation. It comes from a survey in which the Economic Society of Australia offered these top economists a choice of 14 measures identified by as likely to restrain prices for buyers and renters – in other prevent property prices and rents from continuing to rise. Therein lies the first problem: they polled economists rather than real estate experts. If there’s one thing we’ve learnt...
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A question I get asked more than any other is where I see the Australian property market heading in the next 12 months OR what I expect to happen with Australian property prices this year or next year. And the answer I provide is usually delivered in multiple parts. Firstly, there is NO Australian property market. Although economists and journalists often refer to “the Australian property market” and predict what will happen with “Australian property prices”, the reality is that there is no such entity as the Australian property market. Secondly, what I expect to happen with prices...
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Contemplate this scenario: you buy a capital city house for $380,000 and a year later it has a market value of $530,000. Up 40% in 12 months, providing a capital gain of $150,000. Or this one: you paid just $240,000 for a house in a regional centre and a year later it’s worth $325,000 – up 35% in 12 months. And you’re getting a rental return above 7%. A third example is paying $380,000 for a house in a capital city and watching it grow to $480,000 in 12 months. Meanwhile, rents have grown 25% in your suburb, underpinned by a vacancy rate of 0.4%, and your rental return has increased from...
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Are you ready to take your superannuation to the next level? Join us for an exclusive webinar designed to help you leverage your superannuation for maximum wealth creation and tax efficiency. Super Strategies – Building Wealth and Reducing Tax for Investors In this insightful session, we’ll cover: 📖 Actionable strategies to grow your super 💰 Techniques to reduce your tax load 🏠 Methods to harmonise your super with other investments Whether you're a seasoned investor or just starting out, this webinar will provide you with the knowledge and tools to make the most of your...
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Episode Overview: In this insightful episode of the Hotspotting podcast, Tim Graham sits down with Ben Kingsley, the Chair of the Property Investors Council of Australia (PICA), to discuss the vital role that property investors play in shaping the future of Australia's real estate market. Ben provides an in-depth look at the importance of the PIPA Annual Investor Sentiment Survey and how it captures the pulse of the property investment community. Key Discussion Points: Importance of the PIPA Survey: Ben highlights why the PIPA Annual Investor Sentiment Survey is a critical tool...
info_outlineFor a long time I have argued that housing is expensive in Australia because politicians have made it so – AND keep making decisions that add to the cost.
The value of all residential real estate in this country is under-pinned by the cost of creating new dwellings – and those costs keep rising, way beyond the rate of inflation.
One of the biggest elements in the cost of new homes is the taxation component.
The research shows that a massive share of the cost of creating a new dwelling in Australia is taxes, fees and charges at all three levels of government.
The Federal Government, the various state governments and local government authorities all use residential real estate as a cash cow – in other words, they milk it for revenue.
Over the past 5-10 years, there have been a number of research reports which quantified how much of the cost of new dwellings comprises government imposts.
Some of that research has come from the building industry and some have been independent research reports by credible organisations.
And they have all arrived at similar conclusions: that somewhere between 30% and 50% of the cost of a new home in Australia is taxes, fees and charges at the three levels of government.
Why is it 30% to 50%? Because the percentage differs depending on location.
And now that reality has been confirmed by a new research report by the Property Council of Australia in Queensland – which has found that one third of the cost of new homes and apartments in that state is made up of government charges.
The report says: “The Queensland Government’s promise of delivering ‘a home for every Queenslander’ cannot be fulfilled under the current tax model.”
The ‘Stacked Against Us’ research report shows that government taxes, fees and charges make up 32 per cent of the total cost of a new house and land package in Queensland and 33.3 per cent of a new apartment.
For a $730,000 mortgage, that equates to $233,440 in taxes, fees and charges.
The report says: “The impact of these tax settings is seeing Queenslanders spend the first nine years of a 30-year mortgage package paying off prohibitive taxes, fees and charges – plus interest.”
And the report also says: “Queensland is in the grips of a housing affordability crisis. A key reason why houses aren’t affordable is the increasing burden of taxes and regulatory costs in the development of new houses and apartments.
“Taxes on new homes are a double whammy – they increase costs (and therefore sale price) of new builds, in turn increasing the costs of buying or renting established homes.”
The report points out that, over the past three years, the Queensland Government has experienced a $3.5 billion in windfall transfer duty receipts alone - representing a 29 per cent increase in receipts above the forecast level.
The situation in Queensland is being replicated across Australia.
It’s worse in New South Wales. In Sydney, the taxation component of a new dwelling on a block of land can be as high as 50%.
It’s becoming diabolically bad in Victoria, which has by far the highest taxes on residential real estate of anywhere in the nation.
The message to politicians is clear: if you really want to create affordable housing, as you say you do, stop treating the process of creating new homes for Australian families as a cash cow.