What the election result means for the property market
The surprise victory for the Coalition promises to shock more than just voters: our property market is about to get a bit of a shock, too.
Don’t worry, we’ll break down what you can expect over the next three years.
Labor promised big changes to negative gearing and franking credits, which would have likely made homes slightly cheaper as investment properties would no longer carry big financial benefits.
On the other hand, ScoMo will keep current policy as it is, so investors who appreciate the tax benefits of negative gearing and self-funded retirees who rely on franking credits can rest easy. If you’re looking at selling your home in the near future, this policy stability will potentially make house prices slightly higher than if we had a Labor win.
For first home buyers, the government is proposing a drop in the size of deposit needed to secure a loan. The new First Home Buyer Scheme would mean those purchasing property for the first time could do so with a 5% deposit, instead of the 20% currently needed. This is on top of a change to the serviceability buffer from 7.25% to 6%, which would make it easier for people to borrow larger sums. This was first introduced in 2014 to help limit excessive borrowing and high household debt.
With these changes, we should expect to see an increase in the number of first home buyers now being able to enter the market.
It’s also a positive sign that the government are working to bottom out the property market. Don’t be put off by the term; it essentially means the Coalition is trying to reboot what has been a fairly shaky market in recent years.
Another faction working to reset the market is the Reserve Bank of Australia, who have been hinting that interest rate cuts could come within weeks, plus another cut expected before the end of the year.
This will be a good thing for people currently serving a loan as their repayments will go down, giving them more cash to spend on other things. This is likely, however, to drive house prices up. It’s also not necessarily a good thing for first home buyers, though everyone else already with a home or investment property will be cheering.
Lastly, while winter is a notoriously slow time for the property market, an enticing interest rate cut may just see things fire up again. If you’ve been waiting to buy, all signs point towards getting into the market now.READ MORE
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