Rents up
Back in 2014, ACT Treasurer Barr assured everyone that the land tax hike in Canberra wouldn't be borne by renters:
"The impact will negligible...it's highly likely rents will continue to fall".
As expected, after the big rise in land tax on investment properties on 1 July 2014, the value of investor loans took quite a hit over the following two years.
Vacancy rates for houses in Canberra have dropped to an excruciatingly tight 0.7 per cent during the first quarter, with little sign of respite ahead.
After all, surely fewer investors would consider buying a rental home now, at least until rents have risen far enough to cover what in some cases has been a huge percentage increase in land tax liability.
And three years on, SQM Research's asking rents index for houses has increased by nigh on 20 per cent.
In the end, then, it seems that the cost will be passed on to renters...at least for houses.
Source: SQM Research
Although the median asking rent for units and apartments has moved a little higher, this may partly reflect a change in the composition and quality of the dwelling stock, as a great many poor quality old units have been bulldozed to make way for newer apartments.
And there's likely to be better news ahead for renters of apartments ahead too, despite big rates and land tax hikes for apartment owners commencing 1 July 2017.
At the end of calendar year 2016 there were well over five thousand units, apartments, and townhouses under construction in the Australian Capital Territory, comfortably a record high.
Crazy times in the bush capital.
