Last weekend’s federal election saw the Coalition government returning to power in an election that saw policy on property taxation a hotly debated topic. There’s plenty of discussion across all media sources this week.
We’ve summarised a couple here if you’d like a quick read for a property wrap up and what the next 12 months might look like for property markets around Australia.
The following is an excerpt from Michael Yardney’s property update.com.au posted on 21 May 2019:
The election is now over, and to the surprise of many, Scott Morrison will remain our Prime Minister.
So, how will the outcome of the federal election affect the value of your home and our property markets? Housing markets are likely to pick up by the end of the year.
The stability of government and the fact that there are not changes to negative gearing or Capital Gains Tax will encourage investors.
The market hates uncertainty, and the Coalition win should return confidence to our subdued property.
We began the year with two big stumbling blocks which have both been overcome.
1. The Haines Royal Commission into banking.
2. The Federal election
Now it’s time to get on with business as usual.
The timing of the bottom of this downturn will however depend upon the banks loosening lending restrictions and the timing of any interest rate cuts – the first of which seems likely next month and deliver a boost to our languishing markets.
Negative gearing changes off the table as Morrison holds government.
Mr Morrison holding power means the Labor Party’s plans to limit negative gearing to new housing from 1 January 2020 will not go ahead.
The same applies to Labor’s proposal to reduce the capital gains tax discount from assets held longer than 12 months from 50 per cent to 25 per cent, which will now not see the light of day.
What will go ahead under a Liberal government in terms of property policy is a boost for first home buyers, which Mr Morrison announced last weekend.
The Liberal government will allow first home buyers to purchase property with a 5 per cent deposit. This means some lenders will provide loans on a 95 per cent loan-to-value ratio.
The First Home Loan Deposit Scheme will be available through private lenders and small lenders, which Mr Morrison said is a bid to ensure competition on price for Australian borrowers.
Property investors should also keep an eye on where the billions promised in infrastructure spend is distributed, which may present growth opportunities in suburbs and regions which get a funding injection.
The Morrison government has announced $100 billion in infrastructure spend over the next 10 years, which is about $25 billion more than current levels.
Will property markets rally?
The jury is still out on how the markets will react to the Liberal victory, although it’s broadly accepted that prices will remain more steady under a Liberal government.
“The stability of a familiar government, and an expected interest rate cut in the coming months, will boost confidence in the property market and encourage vendors and buyers to reengage,” said LJ Hooker’s head of research, Mathew Tiller.
“Australian’s have been patiently waiting to see the outcome of the May 18 federal election before making a decision to act,” he said.
Labor’s proposed negative gearing changes were expected to rattle property investors, and soften values in capital cities in the short to medium term.
In addition, although modelling was mixed across the board, Labor’s negative gearing changes were also tipped to soften rental returns in capital cities.