With Labor planning changes to CGT and Negative Gearing, there was a big build up in real estate circles to this year’s Federal Election.
But now that the dust has settled, and the Coalition is back in power, what do the Liberal–National Party’s election promises mean for the property market? Let’s explore some key points.
What can Sydney suburbs expect from the election promises?
There’s no question that property market activity has been lower in 2019 than in recent years, thanks in no small part to the recent federal election and the NSW state election in March. This is because both buyers and sellers are typically reluctant to make any serious decisions about the property market when there’s uncertainty around who will lead – and, subsequently, any potential changes that may affect market conditions.
This wait-and-see approach was even more pronounced this year because of the starkly different election promises between the major parties, particularly around real estate policies. Now that the outcome is settled, confidence in real estate will continue to grow for the remainder of 2019 while more properties enter the market – with the potential for prices to lift, particularly in Sydney’s Inner City.
Most importantly for buyers and sellers, we can expect to see greater activity levels across all Sydney suburbs. Here are some of the major points to focus on from the recent election.
Quicker recovery in the Sydney property market
Since Sydney real estate values peaked in July 2017, the NSW capital has seen a decline in the value of houses by -15.2% and apartments at -11%. However, homeowners and investors alike have reason to celebrate after seeing a serious curb in percentage drops from the three months to May 2019 (to just -0.7%), compared to the same period to December 2018 (at -1.8%).
With the Morrison government now re-elected, the Coalition’s plans to continue its existing stance on key real estate policies will likely lead to a growth in confidence for the property market.
Government promises for negative gearing and CGT
Speaking of existing policies, the biggest winners from the Coalition’s re-election are arguably investors. Had the Labor party won power at this year’s election, their proposed changes to both negative gearing and capital gains tax (CGT) would have made real estate a much less attractive option for investors.
Labor’s intended reforms are unlikely to see the light of day any time soon, which many see as good news for investors.
And with the Australian Prudential Regulation Authority announcing it will ease restrictions on interest-only lending, we can expect to see investors flocking back to the market in the coming months.
First home buyers are back
Whether it was a carefully planned tactic to swing voters towards the Coalition in the final days of the election or merely an afterthought, the Morrison government announced plans for the First Home Loan Deposit Scheme very late in the game.
Using a similar scheme in New Zealand as its template, the plan is that the government will act as a minor guarantor for eligible first home buyers who can’t raise the 20% deposit amount on their own (including deposits as low as 5%).
With many Australians calling for assistance to deal with growing house prices, this is a positive step that will no doubt see first home buyers enter the market in greater numbers. Combine this with the Reserve Bank of Australia recently slashing the official cash rate to a historic low of 1.25% – and the RBA governor telling us to expect another cut by the end of 2019 – the barriers to entry are looking a lot lower for would-be buyers.
But it’s not just first home buyers who are the winners. With more buyers vying for real estate, the scheme is likely to have the knock-on effect of lifting property prices in suburbs that are most attractive to first home buyers.
Looking to take advantage of the election promises?
Whether you’re a first home buyer looking to enter the Sydney market or an investor planning to expand your portfolio now that negative gearing and CGT will remain unchanged, get in touch with me today and I can help you find the ideal property for the right price in Sydney’s inner city.