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CONFIDENCE in Queensland’s property market has fallen for the first time in nearly two years on the back of the latest tax grab proposed by the state government.
The ANZ/Property Council Survey released today, taken in the weeks either side of the November state election, has recorded a drop of two index points for Queensland in the March 2018 quarter — the first decline in 20 months.
The state now has the lowest confidence levels of all Australian jurisdictions.
The re-elected Palaszczuk Government has announced plans to increase land tax rates by 2.5 per cent on properties worth more than $10 million and more than double the tax rate for foreign investors from 3 to 7 per cent.
Property Council Queensland executive director Chris Mountford said the results confirmed industry concern about the proposed property tax hikes, which he argued would hurt jobs growth and home values.
“At a time when we need to do more to catch up with other markets, increasing taxes on property is a big economic risk,” Mr Mountford said.
“The impact of these proposed tax increases can already be seen in the figures.
“Forward work schedules, staffing level expectations, and Queensland’s economic growth predictions are all down.”
The Property Council is urging the Government to reverse the proposed tax increases, saying ordinary Queenslanders would pay the price because businesses would be forced to pass on the cost to consumers.
“The proposed land tax hike is ultimately going to flow through to affect capital values, and impose higher rents and costs on businesses,” he said.
“I think there’s a general lack of understanding that foreign buyers are a key ingredient to getting new housing construction starts going.
“If we’re making it harder for those people to invest in Queensland, ultimately that’s going to flow through to lower levels of activity.”
For the last two years, Queensland has consistently lagged behind the major states when it comes to confidence, only remaining in front of Western Australia, where the end of the resources boom created significant economic challenges.
But the latest survey shows a surge in confidence in WA.
“Clearly confidence is starting to return to the WA market,” Mr Mountford said.
“They’ve turned a corner and yet we haven’t had that sentiment shift.
“If anything, we’re still bumbling along behind the other states.”
But ANZ senior economist Daniel Gradwell said that he was not too concerned about the confidence drop in Queensland during the quarter,
“Overall sentiment is still sitting at pretty solid levels, even though it has dropped off recently,” Mr Gradwell said.
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“I think it’s fair to say Queensland has essentially moved past its mining-related downturn.
“We’re starting to see economic activity improve, particularly across the labour market with unemployment at its lowest level in about four years.
“So confidence is already translating into actual economic activity.”
St George Economics noted in its latest economic outlook for Queensland that the state’s economic growth had picked up over the past year, with business investment gaining momentum, commercial construction strengthening and robust employment growth.
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Nationally, the survey reveals New South Wales has lost its throne to Victoria as the property industry with the strongest outlook.
It gathered responses from 1374 professionals within the residential and commercial property sector.
“It’s a large sample size, so we’re confident it’s reflective of what’s actually happening on the ground,” Mr Gradwell said.