Queensland State Budget 2011 and this state budget is nothing but bad news for the real estate market in South East Queensland.
The abolishment of the principal place of residence stamp duty relief is set to increase buying costs and this increase is going to have to be incorporated somewhere in an already dire market.
This is a market which is already severely under pressure and in a slump in the cycle. We all should expect downturns in real estate as it is a cyclical business. How we manage the dips is what sets the turning point for future growth
In relation to this $10,000 payment to fuel new builds. Let’s be clear all this is going to do is put more pressure on demand. This isn’t a lack of demand issue it’s a supply issue and higher costs will do nothing for affordability. We see this as no real solution to meeting the affordability challenge.
It’s not about creating more demand it’s about reducing the cost of housing. If measures are not having an impact on the supply side of equation they are far from being in tune with what the market needs right now to sustain the new build industry.
$10,000 is not going to do anything towards reducing the cost of a new build. If you put more pressure through demand on a market that is already suffering under such supply constraints you are merely going to force prices up.
Investors have already left the SEQ market because of the low returns. This extra pressure on owner occupier buyers is going to be seriously harmful to the remainder of the surviving market. To couple a slow market with higher borrowing costs, incorporating higher interest rates and more stamp duty well we thought we were already at the bottom of the market it appears not.
It’s all bad news.