No let-up in Housing Boom

By Josh Robertson
November 12, 2007
Article from The Courier Mail

IT MUST be some kind of boom town where even real estate agents, normally with the most to lose, brush off the effects of a rate rise.

When the price of a common variable rate loan jumps, this in turn discourages new home buyers from entering the market.

But not here and not now, says John Kalaja, director and principal of Re/Max Solutions in Brisbane's West End.

Given the strength of the local jobs market, income tax cuts and the comparatively low level of rates, first-home buyers will continue to put their hands up for mortgages.

At the same time, all the drivers for inner-city property value growth – from inflation to infrastructure to population growth – are in play, for Brisbane and Queensland, says Kalaja.

"Brisbane's like the Los Angeles of Australia – (LA) grew and grew and grew and that's what Brisbane's doing," he says.

"It's our time, I think there'll be a lot of economic prosperity through the next decade. They're coming here for the jobs now and the lifestyle's a bonus."

This sunny outlook is shared by most small business owners in Queensland, if research by Suncorp's small business banking division is anything to go by.

Almost four out of five of Suncorp's small business customers in Queensland (78 per cent) say the rate rise will not have a negative impact on their overall profitability, with other growth opportunities more than offsetting that impact.

Businesses elsewhere aren't so sanguine, says Suncorp small business banking executive general manager Peter Larsen.

"In Tasmania, that figure is almost 90 per cent," he says. "To some extent, I believe (Queensland SMEs) are being insulated by the growth in the overall Queensland economy."

However, the rate rise may slow the cash flow of some SMEs by encouraging their larger debtors to hang on to their cash for longer, says the Institute for Factors and Discounters chairman Peter Fitzpatrick.

"It is a sad fact that it is often the SMEs which tend to be last in line when it comes to being paid," he says.

Fitzpatrick says SMEs that need cash to sustain growth should consider borrowing against their own sales ledgers, a practice now shared by some 6000 Australasian businesses.