Exploring How Government Policy Shapes Investor Behaviour – Decoding the Queensland Land Tax Ripple Effects (Ep. 213)

Previously known as “The Property Planner, Buyer and Professor”
 

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The trio dive into the fascinating world of investor behaviors during the proposed changes to Queensland land tax in 2022 and explore the intriguing data that sheds light on the impact of legislation on investor attitudes and the rental market.

Mike’s planning for this episode has Cate and Dave laughing… our newest musketeer is challenging the Trio with his cheeky script. But they won’t fall prey to his tricks.

Mike delves into the data, highlighting the significant segments captured: pre, during, and post the land tax legislation and eventual repeal.

Prior to the legislation, 40.9% of investment purchases in Australia were in Queensland. However, during the 98-day period of the legislation, the figure dropped to 33.6%, representing a significant 17.8% decline.

Cate, having considered selling her Queensland property during the land tax changes, shares her firsthand experience and sheds light on the prevailing attitudes among investors at the time. It becomes evident that buyer behavior was heavily influenced by concerns surrounding increased land tax obligations.

Cate raises intriguing questions about other variables that might have affected the data, such as interest rate increases and COVID lockdowns.

Dave probes further, inquiring about the legislation’s impact on the rental market.

The team also emphasizes the offsetting effect of Federal Government negative gearing benefits on State Government taxes. Tune in for further insights on this topic.

Expressing their lack of support for the Queensland Government’s land tax move, the Trio reveals that even post-repeal, the investor confidence only rebounded to 34.73%.

This figure indicates that investors were still wary, particularly due to the Greens’ policies. Dave highlights the long-lasting lag effect that such legislation can have.

Moving on to Victorian land tax changes, the Trio examines the potential impact of tough rental reforms and supply/demand imbalances on rental supply in Victoria. They discuss household formation changes, the influence of Airbnb, and investor fears, which collectively pose challenges to Victoria’s investor stock levels.

Cate emphasizes that it is essential to go beyond assumptions and actively involve investors to address the current rental housing crisis. With limited control over this asset class, they agree that the situation is precarious.

Mike discusses the ‘build to rent’ and superfund theories that are populist decisions presently. The conundrum is that the conditions are just making things tougher for renters. From developers to local council to The Great Australian identity….

Lastly, Mike expresses his belief that Queensland failed to acknowledge their misstep with the 2022 policy. The Trio concludes the episode with a thought-provoking discussion on “build to rent” theories, superfunds, challenges associated with high-rise social housing, current vacancy rates, and the historical significance of the present situation.

As far Queensland’s land tax legislated land tax changes boded; “It’s misguided and it has unintended consequences”, says Dave.

Don’t miss this enlightening episode that explores the complexities of investor behaviors and the far-reaching consequences of legislative changes in the real estate market.

Gold Nuggets:

Cate Bakos’s gold nugget: For our investors who are wondering how all of this legislative change impacts them. Check your legislation and find out all about market rent, how regularly you can increase rent, and what new policies impact you.

Mike Mortlock’s gold nugget: It’s very unpopular to discuss positive roles that investors provide in society. It’s a tough juggle socially for many who are balancing the need to grow their wealth with the altruistic drive to provide housing.

 

Resources:

Ep. 55 – All things property tax

Ep. 87 – Optimising tax deductions

Ep. 108 – Understanding my land tax

Ep. 119 – How supply and demand dictates market movement, part 1

Ep. 193 – Listener questions

https://www.abc.net.au/news/2022-09-30/queensland-land-tax-government-shelves-changes-after-opposition/101491332

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