We can look back on Saturday’s election results and certainly talk about the polls and media commentators missing the outcome. But what will it mean to the property market? I certainly had spent much time thinking about the impacts of negative gearing being wound back and also the possibility of large capital gains tax changes. Not to mention the massive increases to taxes on all wages over around $80k.
According to many business commentators, big share investors had taken a defensive position so as of yesterday many listed companies had large increases in their share prices. We also have APRA writing to all authorised deposit-taking institutions asking for a submission on the idea of removing the 7% assessment for debt serviceability before allowing loans for housing.
We now have the Reserve Bank of Australia coming out and saying there will be at least one rate cut imminently and most commentators agreeing there will most likely be two before September. Add this to the promised tax cuts to all middle income earners and I believe that will cause a surge in the property market.
If everyone has a little more money in their pocket, loans are easier to secure and also cost less to repay, it will not take long to flow through to the property market as a whole. Firstly, the numbers of buyers will increase. Not noticeably at first, but for most properties on the market, instead of 1 -2 buyers there might be a third. At auctions, instead of the current norm of a couple of bids, then a pass in and some robust negotiation from agent and potential purchaser, then may be a few more properties with competitive bidding and some more sold actually under the hammer.
This will occur over the next couple of months with only the real estate agents seeing the subtle changes. In fact, coming into September we may see a drop in clearance rate. This may be caused by an increase in the number of properties that will come to market.
When market sentiment turns it is easy to see new listings. When we get new listings, we get more choice (which has been lacking over the past 12 months), with more choice comes more buyers, with more buyers comes greater competition and with greater competition comes higher prices. With higher prices we get more new listings and so on!! But it all starts with a change to market sentiment.
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JPP Buyer Advocates