NSW new land tax option to push buyers north as bull market continues

A new land tax option, introduced to help first home buyers in New South Wales this week, is expected to have knock-on effects for house prices in the Queensland market.

A new land tax option, introduced to help first home buyers enter the market sooner in New South Wales this week, is expected to push more southern investors north into the Queensland market.

Eligible purchasers can opt in for an annual property tax of $400, plus an additional 0.3 per cent of the land value on their principal place of residence.

Or they can opt for the existing stamp duty and make an upfront tax payment.

Ray White Real Estate Principal Jesse James said the new southern tax would cost home buyers more over the long term and would result in couples looking north to Queensland.

Ray White Real Estate Principal Jesse James said the new southern tax would cost home buyers more over the long term. He said sales in Queensland were still strong but the market was slowing.

He said purchasers would pay the new land tax while living at the property but the option remained with the property when sold.

Mr James said it was also expected to unlock more investment properties for Queensland’s tight rental market.

“I believe home buyers taking up the new southern tax option will end up paying more tax, which I think will, in the future, result in more couples looking north to buy,” he said.

“Investors won’t want to pay the 1.1 per cent extra land tax for a property in New South Wales if it lowers their yield and increases their costs compared to moving to Queensland.

“In Queensland they face a one-off payment and month-to-month costs are less and yields are greater.

“It will help young couples get into the market earlier but the purchaser’s borrowing capacity will only increase a little.

“With rising interest rates coupled with rising costs of living, it may actually be counter-productive.”

Mr James said claims of a bear market in southeast Queensland were untrue in his region and said the market was continuing to rise, albeit at a slower pace than in February.

Ray White Real Estate principal Jesse James said the bull market in southeast Queensland was not over yet.

In the past week, the real estate veteran of 20 years said he had passed a career record, selling a vacant 9000 sqm property in Redland Bay for $5 million.

He said about a year ago, a 5.26 hectare property within a 2km radius, sold for $650,000.

A lowset four-bedroom property on 700 sqm in Redland Bay broke the estate record this week when it sold for $1.1 million after 50 people attended a 20-minute open home.

It sold above the seller’s expectations with a signed back-up contract in place.

Equally a house in Bethania sold in the first 20 minutes of an open home inspection after multiple offers also with a back-up contract secured.

But Mr James said the market wasn’t expected to cool even with expected interest rates rises and government initiatives unveiled in this week’s state budget to add stock to the rental sector.

He said demand for the First Home Loan Deposit Scheme in Queensland had risen from 10,000 to 35,000 applicants over the past year with the number of investment homes set to increase by about 5 per cent according to the budget handed down.

“That will be a good thing also bringing the volatility down a little with more housing for those prospective tenants struggling to secure homes.”