There are more interesting articles, commentaries and analyst reports on the Web every week than anyone could read in a month.
Each Saturday morning I like to share some of the ones I’ve read during the week.
The weekend will be over before you know it, so enjoy some interesting reading.
Property tax rises will slow Victoria’s recovery, REA Group CEO Owen Wilson says
Will the property tax rise slow Victoria’s recovery.
This article from Realestate.com.au looks at what’s going on.
THE Victorian government’s announcement of new and increased property taxes is a major blow to the state’s property market.
At a time when the CBD remains void of the hustle and bustle Melbourne is known for, our shops have reduced foot traffic, offices are sitting half empty, and migration is non-existent; introducing regressive taxes can only be described as shortsighted.
And this is why every Victorian should care.
The proposed measures will not only stymie economic growth, they will also be at the expense of all Victorians, making renting, buying and selling impossible for many.
Why? Because it’s inevitable that while these taxes are placed on developers, investors, and commercial landlords, the costs will be passed on to small businesses, young renters, and frontline workers, who are already struggling enough.
Suburbs popular with renters and students, which have already been impacted by the pandemic, such as Carlton or Hawthorn, will feel the pinch.
The median house price in Hawthorn, home to Swinburne University, is almost $2.4m.
From January 1, the landlord of any student share house in this suburb is likely looking at about an additional $6000 a year in land tax.
This equates to a jump of 19.2 per cent.
That’s a cost that in part is likely to come out of the pockets of tenants, which means it’s also less money being spent at bars, restaurants, cinemas and shops.
Land taxes in Victoria are already higher than in any other state, and these additional increases follow a slate of other reforms introduced over recent years aimed at landlords.
Ultimately, these measures could decrease the level of housing available to lease, which would push rents up, while also affecting the development of new dwellings.
The result would be a further imbalance between demand and supply, again driving both rents and house prices higher.
Shelter is a basic human need, and we need to do more to support society’s most vulnerable.
Homelessness in Australia is getting worse, not better. In a country as prosperous as ours, this is simply unacceptable.
While the Victorian government has a positive plan to invest in social and public housing, these tax hikes are counterintuitive to alleviating the issue.
Instead, they have the potential to drive up prices and rents, exacerbating the problem.
From July 1, property valued at or above $2m will see stamp duty increase by 18.2 per cent, which is the equivalent of an additional $20,000.
Stamp duty is a regressive, inefficient and unreliable tax and we have been calling for its removal for some time.
The phasing out of stamp duty, as proposed by NSW government, should be an important contributor to the recovery of the Australian economy post COVID-19.
Read the full article here.
NSW stamp duty booming again
In this Blog, Pete Wargent looks at the latest NSW stamp duty news.
Tax grab
There’s been some news this week with regards to the Victorian Labor government nudging up property taxes to raise a windfall to shore up the budget coffers.
We’ve seen such tax grabs before, and this time around there are amendments to land tax, new taxes on development, and property investment.
There will be substantial increases to land tax for properties valued at above $1.8 million, and a Windfall Tax for capital gains related to rezoning (there was a similar ‘betterment’ levy in Sydney in the early 1970s, but it was abolished relatively quickly).
It’s been a challenging year for Victoria, with the state no longer attracting interstate migrants as it was previously.
In fact, thousands were leaked to lifestyle locations in south-east Queensland due to Melbourne’s virus outbreaks and lockdowns, as well as the increased ability to work from home.
NSW duties boom
There should be little need for New South Wales to attempt anything similar from a tax perspective, with property transaction volumes rebounding sharply towards 250,000 over the year to March 2021.
Total land and transfer duties have surged back to $8.2 billion for the 12 month period, with much more to come over the remainder of the year.
Read the full article here.
How much more will you need to earn to buy a house if prices go up 19 per cent?
How much will you need to earn to buy a house if prices go up 19 per cent?
This article from Domain.com.au looks at what’s going on.
Households in every capital city will need a significant pay rise this year if they are hoping to enter the property market without being in mortgage stress, new analysis shows.
Financial comparison site RateCity has calculated the annual household income needed to buy now, based on current house price medians and comfortable mortgage repayments after laying down a 20 per cent deposit, and compared it with the projected annual household income needed to buy by the end of 2021.
Rate City found that if house prices reached the dizzying heights forecast by ANZ this year – rising by up to 19 per cent – households looking to buy would need up to $18,881 extra in their pay packet.
In Sydney, house prices are forecast to jump 19 per cent from the current median of $1,309,195 to $1,441,671 by the end of the year.
While the annual income needed to avoid mortgage stress now is $186,592, by then that figure would hit $205,473.
Mortgage stress is defined as paying more than 30 per cent of a household’s pre-tax income on the monthly mortgage repayments.
The analysis comes hot on the heels of Treasury’s forecast this week that there would be no real increase in wages for up to four years.
With that in mind, a salary increase or wage rise of this scale was unlikely, leaving many hopeful home owners priced out of big capital cities, according to RateCity research director Sally Tindall.
“It’s very much an uphill battle for anyone looking in Sydney and Melbourne who is trying to save for their first property,” Ms Tindall said.
“Incomes just aren’t keeping up with property prices increases and that has the potential to start cutting people out of the market.
And those people are most likely to be first-home buyers and low-income earners.”
Every capital city is forecast to record a double-digit increase in their median house price by the end of this year.
In Melbourne, households looking to buy a median priced house by year’s end need to earn $154,759 to comfortably meet their monthly repayments without mortgage stress, based on a 20 per cent deposit.
That’s an annual increase of $15,884 in income to cover repayments without mortgage stress on the projected median of $1,085,845 if house prices rose 16 per cent by year’s end.
Read the full article here.
Property valuers predict more price hikes as Aussies give up on homeownership
With property valuers predicting more price hikes, what does this mean for future homeowners?
This article from 9news.com.au looks at what’s going on in the market.
A new survey has unveiled a concerning trend in the Australian property market, with the findings particularly bad for first time buyers.
Confidence in Australia’s property market has plummeted to levels close to the beginning of the COVID-19 pandemic, according to research by comparison website Finder.
Finder analysed data collected from more than 24,000 survey respondents to uncover its Property Positivity Index.
The index, which was at 67 per cent just six months ago, now sits at 49 per cent, only minimally higher than the pandemic low of 42 per cent in April last year.
Finder’s head of consumer research, Graham Cooke, said property confidence had been a rollercoaster during the past 12 months.
“As lockdowns rolled out across Australia and open house inspections declined, Finder’s Property Positivity Index nosedived, only to recover again as the housing market sprang back to life,” he said.
“Both the rock-bottom cash rate and FOMO (fear of missing out) have turbocharged prices, but fears of a property bubble are making many Aussies pessimistic that now is the time to buy.”
However, 74 per cent of respondents still felt property prices in their suburb would continue to rise during the next 12 months.
A group of 16 experts and economists from Finder’s RBA Cash Rate Survey were asked to analyse some of the results from the survey.
The panellists were torn on whether first-time buyers who had saved a deposit would miss an affordability window if they did not purchase within the next year.
Nine of the 16 experts said first home buyers would miss out while the remaining seven said they would not.
Dale Gillham, stock market analyst from Wealth Within, said first home buyers should not be worried.
“I have never seen a time when we thought property was cheap for anyone, let alone first-time buyers,” he said.
Rebecca Cassells of Bankwest Curtin Economics Centre said buyers could miss a window if they don’t pull the trigger within the next year.
“Increased house prices driven by significant stimulus and low interest rate environment has the potential to lock out future first home buyers by making it even harder to come up with the deposit needed to enter the market,” she said.
Kids Have Been Reading Longer, More Difficult Books in Lockdown, and It’s Boosting Moods
It looks like one good thing has come out of lockdown.
According to goodnewsnetwork.org kids around the world have been reading and improving their literacy.
Literacy skills have actually improved in the pandemic, with children reportedly picking up more challenging books and getting lost in fiction to combat isolation, a study from the UK has shown.
With schools often closed, many more pupils began to enjoy reading again—with 56 percent of young people saying they enjoyed reading either very much (24 percent) or quite a lot (32 percent).
During the first British lockdown, One of Us is Lying by Karen M McManus and Harry Potter and the Prisoner of Azkaban by J.K Rowling were ranked favourite books by high school and elementary school pupils respectively.
A major study by learning and assessment provider Renaissance Learning analyzed the reading habits of more than 1.1 million pupils across the UK and the Republic of Ireland, including 46,722 Scottish youngsters.
The study showed reading skills have improved over lockdown periods, with many children picking up longer books of greater difficulty.
The National Literacy Trust’s Annual Literacy survey of 4,141 pupils across the UK found reading for pleasure dipped at the beginning of 2020, and recorded its lowest level of self-reported reading enjoyment since 2005 (48 per cent of children).
But this changed drastically with three in five children saying reading made them feel better during the lockdown.
More than a third also said reading helped them when they felt sad because they could not see friends or family.
At Scottish elementary level and particularly year two (the equivalent of first grade), pupils were reading a larger variety of titles compared to their English counterparts.
Book reading difficulty in year two was at its highest for Scottish children, who were reading books almost two years ahead of their chronological age.
Professor Topping, from the University of Dundee’s School of Education and Social Work, said: “During the lockdown overall, pupils were tending to read longer books of greater difficulty and with greater comprehension.
Read the full article here
from Property UpdateProperty Update https://propertyupdate.com.au/must-read-articles-the-last-week/
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