Hi,
With all the bubble and squeak of the Emissions Trading System I'm wondering… what will be the impact for property investors?
Any one have any thoughts?
– Steve McKnight
Steve McKnight | PropertyInvesting.com Pty Ltd | CEO
https://www.propertyinvesting.comSuccess comes from doing things differently
Personally, I don't believe that residential owners will feel the effects as much as those involved in commercial property however I will look at both sides.
Residential owners – have very little direct recource to reclaim any increased costs due to an ETS other than by raising rent (a very blunt instrument in a soft rent market). Areas which will be impacted will include: water rates, council charges & utilities. Owners of units will get hit harder as they will share the common area costs which includes power for lighting, vertical transportation and the like.
Commercial owners – although many have the benefit of nett leases (where tenants pay their share of outgoings), there may be some pressure to shift towards more efficient services (as is seen with 5 star and 6 star commercial buildings), greater emphasis on 'green design criteria' to reduce running costs.
It's hard to see how the cost of construction won't increase, and therefore builder's margins etc. will too.
I suspect insurance will also increase (as the cost of replacement will increase).
It may also lead to an increase in secondhand house prices generally (as it costs more to build new, people will move into second hand homes and increase their price), and an increase in rents (as more people are forced to rent).
Of course, higher prices = higher inflation – higher interest rates.
– Steve
Steve McKnight | PropertyInvesting.com Pty Ltd | CEO
https://www.propertyinvesting.comSuccess comes from doing things differently
Yes of course the costs will go up,
Essential services … council costs … labour costs … super contributions … food … everything will be effected except for wages.
Affordability … is related to age group and financial position.
18 – 28 year olds with 20% deposit and savings history.
28 – 35 year olds married starting a family
35 – 50 year olds buying investment properties for retirement income.
Plus 55 developments.
Aged care costs up.
Don't forget the cost of health care and medical … young people on this site don't care about super of health but it is Australias major problem and someone has to pay for it.
Banks now lending only 50% against commercial properties … that means no or little faith in businesses.
If you work for a boss you are going backwards so you had better become a entrepreneur like Steve to get out of the rat race … is that right Steve …
I believe the bargains are in all cities but old suburbs near rail lines "golden Oldies" we are building 4 project homes next year on the north shore in Sydney and 2 in Brisbane under JVs with friends.
I also like old one bedroom apartments for renovation, in Parramatta in Sydney you can buy them for under 200k
Low end market will rise and the top end rich market will drop another 30% IMHO above 2 million dollars.
Extreme Tax System,
I think first home buyers who are renting will be hit hard, with the 30% raise in bills and of course rent etc, it will be harder than even to buy into the market.However i dont see property getting any cheaper because of the lack of FHB. Any fall in FHB will be picked up by investors and migrants
SteveMcKnight wrote:It's hard to see how the cost of construction won't increase,100% agree with you there.
Electricity and gas prices are going up and with them the cost of cement, bricks, steel, kiln dried timber and other building materials where energy cost is a large component of the manufacturing cost . Would not be surprised to see building costs going up 50% over the next couple of years. If the aussie dollar goes back to 70c-75c prices could go up even more because the cost of imported internal fittings, doors, window frames, etc will also go up.
I was only reading yesterday that the proposed changes to the Building Code of Australia will enshrine energy efficiency into the requirements for new houses. These measures will be costly, not attributed to the ETS or other scheme but still affect overall construction costs and affordability.
Doesnt matter now, the Senate stopped ETS.
The ETS may have been canned, at least for the moment, however the BCA will be the standard by which all buildings will be constructed.
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