Brisbane’s property market is reeling under a slew of unfavorable conditions. The prices are already very high and BIS Shrapnel has declared that South East Queensland would see the rise in prices of residential properties by as much as 22% in a very short span of mere three years. The market spirit has dampened further by this information. Steve Greenwood of Property Council of Australia has more to add. According to him in the coming years rental rates of the property are expected to go still higher. He further informs that not only have the prices increased in the past years, the trend shows signs of getting stronger in the coming years.
This means that people who were looking forward to purchase property in Brisbane might have a hard time ahead. Brisbane city budget has not been very helpful either. In fact according to a number of experts in the real estate sector, it is because of the increase in rates declared in the city budget that rental prices would experience the skyrocketing trends.
In the past the rate calculation was done on the same basis, be it a house or an apartment. This was done using a fixed dollar rate and the unimproved value of the land. The apartments got lower rates primarily due to the fact that a number of apartments stood on the same piece of land and the owners of apartment had to share it. Come 2009 and the things would be different. The owner occupied properties would now be rated according to a parity factor. This parity factor takes both the value of the land and the value of apartment into account and thus drives the rates higher.
Dan Molloy of Real Estate Institute of Queensland has warned people who have apartments closer to CBD. They would be the hardest hit by this new system because their property has considerable value. Brisbane Labor Councillor David Hinchcliffe says that in some cases an increase of 700% may be noticed. On the other hand Lord Mayor Campbell Newman refutes such estimates. He informs that while significant increase would take place, it would not be higher than 150 to 160% In the worst case he says that increase would still not be more than 300%.
Greenwood says that property investors who have rented out their investment units would forward the burden in the form if higher rents to the tenants. On the other hand Newman says that increasing the rent substantially with the increase of rates would be a risky step. He says it is neither fair nor justified. Molloy is also worried that this would mean more pressure for a market that is already reeling under pressure from other sources. Molloy says that vacancy rates are at an all time low.
Greenwood also holds the rise in property costs responsible for this. It is simple economics. People can not buy homes so the demand for rentals is high. At the same time, the same factor is also responsible for shortage of supply. Greenwood also recommends the unlocking of more land so that the prices can be brought under control and for market to avoid getting in a condition where it might be facing a total collapse.