- New South Wales and the Australian Capital Territory update
Quarter four of 2015 can be defined as a period of lower growth following a sustained surge.
While price growth in the Sydney and Melbourne housing markets continues to set the bar nationally, median prices fell in the December quarter by 2.3 per cent. Despite this slowdown, prices rose by 11.2 per cent in Sydney during the 2015 calendar year.
In the commercial office market, rental growth was robust, with Sydney reporting a quarterly uplift of 3.9 per cent in the past quarter to November 2015. Sydney has seen a 3.9 per cent increase in rental returns for the past quarter and an 8.2 per cent increase for the year.
ACT Land Tax Exemption Application
Developers looking to build in the Australian Capital Territory need to apply for land tax relief using an Application for a Builder’s Land Tax Exemption Form, under changes in the Land Tax Act 2004 (ACT). Prior to 24 November 2015, when the act came into effect, land owned by a company for residential property purposes was exempt from land tax for two years. The latest change will require companies to apply in writing for this benefit, with a declaration that the land will only be used for the construction of residential premises and also that it will be sold once construction has finished.
Greater Sydney Commission
In late January, the Greater Sydney Commission saw a great change with the appointment of a new CEO, Sarah Hill. The Commission is charged with drawing up plans for six districts across Sydney in a bid to promote the efficient allocation of resources across properties. It is envisaged that Sydney will become a more planned city, with several high-profile members of the public, including Lucy Turnbull and Geoff Roberts, being appointed as commissioners.
This signals a willingness by the government to continue to invest in the development of Sydney, and it is expected that developers and investors will have abundant opportunities in the medium and long-term to take advantage of this increased activity. Of particular note is Parramatta, which has already seen a doubling of the median house price in the past 10 years from $500,000 to $1,100,000 as the council seeks to attract private sector investment.
Western Sydney infrastructure update
Western Sydney has previously been defined by a lack of infrastructure, thereby creating barriers for many potential investors and home owners. While growth in the western Sydney market has slowed recently, both the Australian and NSW governments have shown interest in increasing infrastructure spending for this area, with a 10-year road investment plan of more than $3.6 billion being announced in 2014. This is expected to boost interest in the market again, combined with the development of the Badgerys Creek airport. Planning has already commenced on several local road upgrades worth $200 million. 2016 will be a year of opportunities for developers and investors, as the planning committee takes on community comments which will impact the final outcome of the project. It is recommended that interested parties submit their opinions in writing to the Roads and Maritime Services.
The project will result in new and upgraded roads as well as improved public transport to Penrith, Liverpool, Campbelltown and CBD precincts. Of particular note are the construction of the new M12 Motorway and the widening of a portion of the M4 Motorway to four lanes. This will have the effect of increasing demand for properties around the affected areas as commuting time is cut down.
Construction contracts are expected to be awarded for the Bringelly Road and Northern Road upgrade in mid to late 2016, so construction companies and investors will be focusing on the tender process for some time. The full benefits of the various projects will be seen at the end of the 10-year project and real estate prices are anticipated to rise steadily during that time.