The auction clearance rates keep pushing through the 70’s barrier even though much of the weather has turned towards winter. With over 700 auctions already scheduled for next week and with only one long weekend in the distant calendar, I can see the Melbourne property market continuing on to further heights.
The Federal election due in around eight weeks will be fun throughout the media. Most media outlets will be looking for faux pas’ from whichever side and they can to get a rise in ratings. Most of the politicians will be trying to get a message out each day and this will be tough to continually offer something new whilst trying to hammer home their own policies. Hopefully I can find some reruns of M.A.S.H. to watch when I sit down in the evening!!
The Labour Party wants to stop negative gearing on all but new properties but will allow any negative gearing to remain on existing arrangements. If labour get in this will cause quite a flurry of people looking for property investment opportunities. Negative gearing works well only in a relatively high taxed environment where the property has substantial capital growth. Unfortunately many new properties have limited capital growth due mainly to the fact that most people who buy new properties pay a premium for them. It therefore takes substantially longer to achieve any gains and when you try to sell (under the labour party new rules) the new buyer will not get any tax advantages and therefore have to pay substantially less.
If the labour party gets in then until the cut-off date, most investors will be trying to purchase anything they can to improve their tax advantage regarding negative gearing. On the other side of politics, the coalition has said they will not touch negative gearing (this week!)
EIGHT WEEKS IS A LONG TIME IN POLITICS!