New boom set for Queensland

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Gold Coast property market bosses push to weed out the sharks, reports JULIA OAKLEY.

Queensland's shark-infested property market looks set to become safer thanks to new legislation designed to curb the profiteering by unscrupulous operators that has seen naive offshore investors charged from $A10,000 to $A50,000 over the odds for a property in the sought-after Sunshine State.

Real Estate Institute of Queensland president Jean Hamer says some development projects, particularly in south-east Queensland, were being marketed with "built-in" margins such as inflated prices and unrealistic rental guarantees.

These margins could inflate prices from between $10,000 and $20,000 to as much as $100,000 on an investment property.

"Out-of-town buyers may find, upon visiting the project on-site, that they have paid up to $20,000 more than comparable properties in the area," says Hamer, warning that purchasers could find themselves owning property which, after rent guarantees had expired, were unable to achieve the rent they had been led to expect.

On top of this, says Hamer, they could be faced with excessive vacancy periods if supply happened to exceed demand.

"Their only recourse is civil action, which is costly and time-consuming and creates a further loss on the investment."

But with another feeding frenzy forecast, the new legislation, intended to sort the sharks from reputable real estate operators, will not arrive a moment too soon for any more Kiwis considering quitting New Zealand for Queensland.

According to a report by Propdap Services, sales of housing packages rose by a remarkable 38.4 per cent in the September quarter on the same period in 1998, although vacant land sales were steady, with an increase of just 1.2 per cent. Prices for new detached housing and medium-density dwellings on the Gold Coast are expected to rise dramatically in the next six months.

Another report, recently released by Midwood Property, says Queensland is now better positioned to enjoy future capital gains than any other Australian state. This report attributes the low capital growth of recent years in some areas of the state to an oversupply of new homes built during the boom years from 1992-95. That excess has now been absorbed, with most regions currently building new homes at a rate slower than required to house their increasing populations.

Hamer says this means property in Queensland is now "very competitively priced, unlike some other states where rapid price rises in recent years have encouraged a surge in new house building."

She says Brisbane, in particular, is showing signs of shifting from a buyers' market to a sellers' market, especially at the top end.

"Anecdotal evidence from REIQ members suggests buyers have begun to take advantage of a market that has remained flat for several years."

Hamer says the price rises anticipated with the introduction of GST in July, combined with record affordability levels and low interest rates, were driving increased market activity across the board.

"Last year was a tentative year for the property market in Queensland; there was little movement in prices and sales were sporadic. However, it's likely that improved consumer confidence and consequent improvements in the market will result in many suburbs within a five to 10 kilometre radius of the Brisbane CBD, or close to regional centres, experiencing price increases during the next two years."

Research just released by the Real Estate Institute of Australia shows home loan lending has soared to an all-time high, exceeding $19 billion in the three months to September 1999.

Nationwide, a total of 136,972 home loans were issued, up 23 per cent on the previous year and a 2.2 per cent increase on the June quarter.

The fourth-highest home lending record ever, the total amount lent by banks, building societies and other lenders was 35 per cent higher than in the same quarter in 1998.

Hamer attributes the increase to a surging Australian economy, with the property sector boosted by "the most affordable interest rates in decades."

She says: "All the indicators are there at the moment, with many agents reporting a strong increase in inquiry levels. When sales volume increases the market can expect an increase in prices to follow, as a result of supply and demand."

So those considering relocating across the Tasman had better move quickly. Yet there are still dangers lurking for the unwary.

Real estate agents in Queensland are - theoretically, at least - regulated by the antiquated Auctioneers and Agents Act 1971, which is currently under review by the state Government with a draft Bill expected early this year.

Hamer says the old Act limits the institute's authority to effectively enforce industry standards.

"We have submitted a reform package which will ensure legislation adequately protects consumers from unethical operators while allowing the industry to prosper."

As it currently stands, the Act imposes strict conditions on real estate agents which, however, do not necessarily apply to anyone else involved in offering real estate for sale.

The Real Estate Institute has been liaising with the Queensland Labor Government's Minister for Fair Trading to ensure any changes to the Act safeguard consumers from unscrupulous operators.

"The REIQ wants the power to prevent unethical people from operating ... we want to ensure consumers' experience in property is a positive one, but with the current legislation our hands are effectively tied.

"We strongly suggest that investors take the time to do their homework and ask a local REIQ member agent about market prices and rental returns."