In the face of the COVID-19 pandemic, the Real Estate Institute of Queensland (REIQ) has outlined a number of urgent priority areas it is seeking action on to assist in maintaining the health of Queensland’s property market.
The real estate body’s CEO, Antonia Mercorella, highlighted that the state’s real estate sector is worth over $1 trillion and directly employs more than 50,000 Queenslanders.
“Activity within the real estate sector contributes in excess of $30 billion every year to the Queensland government,” she outlined.
“Protecting and sustaining the Queensland real estate sector is critical to safeguarding our property market and supporting our local economy. In order to do so, strong action needs to be taken.”
The REIQ has proactively developed a number of recommendations and initiatives it proposes would assist in minimising potential economic impacts.
It is calling for the following to be implemented with immediate effect:
• Extension of the First Home Owners’ Grant to established housing
This will stimulate economic activity through the introduction of increased numbers of first home buyers to the broader property market.
• Implementation of a 50 per cent reduction in development application costs across all local governments and a streamlining of application processes
By removing barriers to development and reducing costs, the REIQ said construction levels would be boosted, which would increase competition and reduce costs for the end purchaser.
• Deliver a 75 per cent reduction in stamp duty for the entirety of the coronavirus pandemic
A short-term, but significant, reduction in stamp duty payable on property transactions would have a “positive effect on confidence within the property market”, the industry body has said.
In turn, this would offset the predicted drop in transactions expected during the immediate crisis period.
“Lessening the financial burden of stamp duty in particular will lessen the perceived financial risk and act as a significant incentive to purchasers who may otherwise be discouraged from purchasing during this crucial period,” Ms Mercorella explained.
“Similarly, such an initiative would encourage vendors to list their properties during the coronavirus period, buoyed by the likelihood of increased buyer activity.”
In the 18 months following the end of the coronavirus pandemic, the REIQ has also proposed a number of measures it said would “continue to support and stimulate the property market”.
• The removal of stamp duty for persons aged 65-plus
To encourage older Australians to move into age-appropriate accommodation by reducing the financial burden of such a move.
A likely consequence would be that younger Queenslanders would have greater access to housing stock.
• A 50 per cent reduction in stamp duty where residential investment property purchases are committed to the permanent rental market for three years or more
This would stimulate investment in the state, according to the REIQ.
• A 40 per cent reduction in stamp duty for all other residential property purchases
For the real estate institute, “a significant reduction in stamp duty payable on non-investment residential property purchases will have the effect of instilling confidence into the property market and provide incentive to individuals Australia-wide to consider migration to Queensland”.
For the CEO, “the combination of increased rental demand and decreased property investment is a looming social time bomb”.
She highlighted that at present, more than 90 per cent of Queensland residential investment property supply is provided by mum and dad investors “who are most likely to be sensitive to increased risk to their property investment returns”.
“A significant decrease in stamp duty payable on residential investment properties, qualified by enforceable commitment by investors to making that property available to the permanent rental market, will have the dual effects of stimulating investment confidence and activity,” Ms Mercorella continued.
This would position Queensland “as a highly attractive investment market and ensure adequate supply is maintained to meet increasing demand”, she argued.
Taxes and rates
The REIQ has made a number of other “general” demands of the Queensland government, including urgent facilitation of a significant reduction or temporary removal of land tax for the period of the coronavirus pandemic, a waiver of local government rates for those who have lost their income, and an implementation of a 50 per cent discount on local rates elsewhere for the stimulation of the state economy.
The real estate profession
It has also focused its attention on direct support of the real estate profession, “urgently” requesting the following be provided to members of the profession:
A 12-month extension to all existing licence and registration holders in the state, commencing 1 May 2020.
The provision of funding to the REIQ itself to assist it to continue to provide essential resources, support and training to the industry during the pandemic period and beyond.
Provide funding to establish a “property think tank” which would incubate new initiatives for the maintenance and regeneration of local property markets while also creating new opportunities and jobs within the real estate sector.
On the last request, the REIQ said the consequential benefit would be “the continued generation of state government revenue”.
“The REIQ believes that it isn’t enough to put money in people’s pockets during this time; instead, we need to maintain confidence in the Queensland property market and assist the real estate sector to ride out this crisis and emerge stronger and more resilient for the benefit of all Queenslanders,” Ms Mercorella explained.
She said the industry body “fundamentally believe[s] these relief package measures will keep Queenslanders employed within the state’s second-largest employment sector, keep essential services functioning at this critical time and, most importantly, accelerate our state economy’s recovery once this crisis has passed”.