What the federal election result means for property in Australia

May 21, 2019

With the Liberal Party pulling off a surprise win in the election, property owners around Australia can now breathe a sigh of relief as the threat of Labour’s proposed policy changes to Negative Gearing and CGT discounts are no longer playing on the minds of investors. Investors are a much-needed segment of property buyers, and without them being active in the market we see reduced demand and softening of prices and consequently, the quality stock doesn’t come up for sale.

Typically homeowners and buyers alike, will “sit on their hands” in the lead up to an election and wait for a result before they make a decision on whether to buy or sell. Now that we have a result, and it isn’t all doom and gloom, we expect to see more stock now coming onto the market. This will give buyers more choice and not have as much competition on what is currently a low volume of properties for sale.

Another factor which is now playing into the hands of buyers and sellers is the looming reserve bank interest rate cut. Widely being tipped for June or July, and another within 12 months, if passed on by the banks it will make borrowing money cheaper and add some additional impetus into the market with additional buyers entering.

And lastly, APRA has also just announced that it has sent a letter to the banks allowing them to loosen their loan servicing formulas down from the 7% interest mark to just 2% above the variable rate. This change to servicing tolerances will allow more credit to flow back into the market and is also a positive for the market.

So our tip at BuyerX is that the property markets in Melbourne and Sydney will recover from the current lulls and make some headway into the second half of the year. With affordability improving and now debt being cheaper, we’ll likely see an increase in activity from upgraders and first homebuyers.

If you are looking to upgrade your family home, please get in touch for a free chat to see if we can help.