It’s a trend that has been present for some years now, but large Brisbane Construction companies are starting to feel the pain from new apartment build jobs which are drying up quickly, and now down 40% as reported this week in Domain
Instead Brisbane residents are opting for detached houses with detached house and land packages seeing an upswing of four percent, year-on-year to the end of the September quarter.
Although excellent news for the smaller building companies who specialize in the detached housing sector, the larger firms are concerned.
Oversupply and increased consumer demand for detached homes seems to be a culprit here, however one must look at whether the introduction of the new 3% transfer surcharge placed on foreign investors in Queensland, might be the major problem.
The Property Council of Australia Queensland Executive Director Chris Mountford reported to the AFR back in late 2016 just prior to the new foreign investor laws being introduced, that some of Australia’s top property companies, including Stockland, Lendlease and Mirvac, could be caught out by definitions in the new laws because they may have a majority foreign shareholding.
Fifty-fifty joint ventures between Australian and international investors, where control is jointly shared, would be caught by the Queensland surcharge.
“By imposing the Additional Foreign Enquirer Duty (AFAD) on these entities, there is a high likelihood that the additional costs will be passed onto the end purchaser who is likely to be a Queenslander,” he said.
Leading private Queensland developer Mark Stockwell furthered the sentiment, saying that international investors make up between 10 and 30 per cent of Stockwell projects. Without these investors the projects don’t get up and the construction jobs don’t get delivered.
“It’s going to stop development like there’s no tomorrow and that’s the thing I’m really worried about,” he said.
So if foreign investors are either passing on the transfer fee to potential buyers or are backing out altogether, could this be the hidden reason why Brisbane’s residential apartment market is in such despair, and what affect will it have on local jobs?