And as they as they were raising money and no doubt some investors had already been selling off properties in Queensland over the last year out of fear of this land tax. And what’s been happening as a result of that is the rental market has been tightening, it’s been tightening excessively in Brisbane and the vacancy rate is below 1%.
That change and that tightening of the rental market is irreversible. So while this decision has been made, it’s not going to instantly turn around, supply new housing, new investment properties to the market that enables rates to stop going up. We’re seeing 10 to 15% rental growth across the market in different parts of Brisbane, we’re seeing varying rates. But all markets in Brisbane are very tight right now.
That’s a huge burden on tenants, but it’s also leading to windfalls and gains for property investors. So for those of us that didn’t sell out in the last 12 months out of fear and held our nerve for what was understandably going to going to happen, which has been a concerted effort through the media, the property industry itself, even tenant advocacy, has been putting pressure on the Queensland Government to reverse that tax and now it’s happened.
So those of us that have held our nerve, we’re getting the benefit of that tight rental market and it’s going to take quite a while for Queensland to see a change in supply. And we’re obviously seeing fewer housing starts as a result of higher interest rates and higher construction costs. Fewer apartment starts because of higher construction costs. And that’s going to mean that in the next six, 12, 18, even 24 months, there’s fewer homes that will be coming, starting and coming through to completion, which is going to continue to put upward pressure on rents.
And ultimately, once interest rates, the tightening cycle starts to ease and market sentiment changes, it’s going to lead to a return to positive capital growth, and that may start to happen as early as the first quarter of 2023, although we’re already seeing and still seeing it in affordable markets where it has seen the highest rental growth as well, and where those markets are supported by first time buyer grants and first time loan guarantees scheme as well as free stamp duties for first time buyers that are eligible.
So a lot of positive news for Queensland today. While I wasn’t scared of the land tax because I knew that it was tightening the market and I’m seeing my rents going up, as were our staff and our clients in Queensland. It’s still positive news because I know that it’s for a healthier, healthier environment for Queensland and for renters in the future.
