The Federal Election and Real Estate

The Australian Federal Election date on the 18th of May is very close now, and with it, comes a high level of uncertainty.

Who will be running the country at the end of this month? And more importantly, how will their policies on Negative Gearing and Capital Gains Tax affect real estate?

The Australian property market has been weaker over the last year and a half; it’s undeniable. But what impact will the election result have on buyer and seller sentiment going forward?

Pete Mosedale, Director of Upstate, gives his opinion.

 

The election, negative gearing and capital gains tax.

There’s no denying that both parties have a number of proposed policies that will definitely have an impact on Real Estate in this country: mainly that of negative gearing and capital gains tax.

While the Liberal Party is still backing the current paradigm, Labor has a different approach altogether.

Labor has stated that if they were to win, they will introduce drastic changes to limit negative gearing and increase capital gains tax starting on the 1st January 2020. These reforms won’t apply to newly-built homes and existing investment properties, while the capital gains tax discount will be halved for investments entered into after January.

If you already use negative gearing, nothing changes, and you can still use it for new houses (you can read more about this policy here). However, for sales and acquisitions of everything else next year and going forward, expect things to be different if Labor is elected.

If this was to happen, I’m expecting a ‘liquidity event’, where we have an equal balance of people selling, to ensure they get the most out of capital gain, and people buying, to lock in their negative gearing benefits into the future.

I’m predicting a well needed general boost in the new property sector.

All things considered, I’m hoping that the country doesn’t go down this path because amendments to negative gearing and capital gains tax aren’t beneficial to the Australian economy and the property market.

It runs the risk of taking a lot of the property investors out of the market, which would be detrimental to rental tenants and housing, in general, putting further stress on the rental sector and availability of property that already sits at less than 1% vacancy.

The only alternative is for the Government to build housing, and I don’t think that’s going to happen, as there is no talk of this in any policy. With such a growing population, we have to be very careful.

The property investor is an integral part of the Australian property ecosystem, and they need to be supported.

 

What does that mean if you’re thinking of buying or selling?

It’s human nature to avoid uncertainty, and this has reflected in the market experiencing a bit of a pause recently as everyone waits to see what will happen later this month.

However, our team have actually had more enquiries and interest over the last quarter than we have witnessed in 18 months. We have sold over 80 properties in the last 3 months and are seeing renewed buyer activity with investors seeing value after the correction.

Harry Triguboff mentioned in a recent Daily Telegraph article that he believed the bottom of the real estate market was reached in January 2019, and that it’s on way to becoming more stable now.

While this is his opinion, we have seen a lot of signs indicating that there is truth to this. We aren’t seeing growth, but this renewed buyer activity is telling me that that the market is in a recovery phase.

For example, at Upstate, we have seen that both email and Open Home enquiries are significantly up compared to this time last year.

 

What should you do around the election?

There is actually an opportunity right now to get your property listed on the market so that you can go live before the election. This way, you can ride this predicted post-election wave before there the flood of properties enter the market.

At Upstate, we’re actually running a lot of campaigns at present which run over the election weekend, so that these properties are on the market and ready to take advantage of the influx of buyers.

If you are thinking about selling, it’s best not to wait until after the result. So, call us today get the preparation done so you can beat the post-election run of property.

 

Some tips to take onboard

We’re still in a market where A-Grade properties are still doing well. These are the highly appealing, recently renovated or new homes.

Despite there being fewer buyers and less property right now, all of the attention is focused on these A-Grade homes. The lower grades are the ones really feeling the pinch.

So, if you’re looking to sell, it’s about raising the value of your home with the right preparation to ensure it’s in the highly desirable category.

If you’re looking to buy, I’ve never seen a better time. With the market having gone through a recent 10 – 15% correction, this is an opportunity not to be missed.

 

How can Upstate help you?

If you’re feeling a little unsure about all the property comings and goings and would like some advice, then let our professional Upstate real estate team help you.

Remember – we’re all watching the market every day, and have years of experience monitoring all of the ups and downs. We can help make more sense of what’s happening, whether you’re looking to buy or sell, rent or invest.

Give us a call on (02) 9971 9000 we look forward to chatting with you soon.

Signing off (and always here to help),
Your local Upstate team, check out our sales team stats here.