Last week the Queensland Government delivered the biggest budget surplus ever delivered by a Government in Australia.
The surplus came to $12.7 billion and follows Western Australia who delivered an equally impressive $3.3 billion surplus last month.
Compare this with the $10.3 billion deficit delivered in Victoria and forecast $12 billion deficit in New South Wales.
The economic strength of a State or Territory certainly bears consideration when choosing an investment destination.
A strong economy allows a government to invest in much needed infrastructure which leads to job creation, population growth and ultimately more economic growth.
That’s the really encouraging thing about the Queensland budget; a record $89 billion allocated to infrastructure projects.
The downside is there was nothing for housing – no incentives for first home buyers or investors to deliver much needed affordable housing.
According to the Property Council of Australia, there is a shortfall of 36,000 houses in Queensland today.
The only commitment to housing in the Queensland budget was an allocation of $1.1 billion to build 3,265 social houses by 2025 and a total of $2 billion to build 5,600 new social homes in total by 2027.
First, 5,600 social homes will help but it certainly won’t solve the housing shortage. Especially when the timeframes are 5 years away, by which time the shortfall will be even greater.
Second, this would cost $306,000 to $357,000 per dwelling. I don’t know any developer capable of delivering for this cost today, let alone a government with all the extra time and cost involved with their processes. I wouldn’t be surprised if the actual cost blows out significantly.
Finally, as I mentioned in my chat with ABC radio last month, we should be incentivising landlords to help provide much needed supply.
There are 620,000 landlords in Queensland who provide rental housing – roughly 1 in 3 of all homes.
Why not halve stamp duty for anyone who buys a block of land or unit and makes it available for rent in the next financial year?
Stamp duty on a $300,000 block of land in Queensland works out to roughly $9,000. With a 50 per cent discount, stamp duty would equate to $4,500 per house.
Across the 36,000 houses we need, the total cost would come to $162 million and we would solve the housing problem.
It’s even cheaper if you totally waive stamp duty and the bill comes to $324 million (i.e. 36,000 homes at $9,000 each).
Applying the same practice to units would double the number as stamp duty paid would be on the cost of construction and land. You get the picture…
The Queensland Government might get lucky here, and the much-needed housing may get built despite its lack of action.
There is an overwhelming case for investing in Southeast Queensland housing today. The strongest economy in the nation, record population growth, record infrastructure investment, record low vacancy rates and a house price 40 per cent cheaper than those in Sydney.
But why take the chance?
