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An exceptionally positive outcome...
Summary and Impact
Following the results of Australia’s Federal election this past weekend which saw the Liberal National Party clinch an unexpected but convincing victory. Here's a quick 'wash up' and likely 'summary and impact' on the Australian property market.
Let's quickly unpack for you, what is an exceptionally positive outcome for the Australian property sector.
~ The elimination of uncertainty around negative gearing benefits and capital gain tax. Policies remain unchanged and perhaps most importantly are unlikely to be revisited again by either side of politics, for a very long time.
~ Significant taxation cuts to be introduced by the Government for the vast majority of Australians along with small businesses, fuelling consumer confidence and boosting both employment and spending. The Government has a mandate for 94% of taxpayers to pay no more than a 30% Marginal Tax Rate once the plan is fully executed.
~ A proactive and substantive new First Home Buyer Deposit Scheme backed by the Government, enabling more buyers to enter the market with minimal deposits. (see image reference above and impact point 2 below).
NOW WE KNOW THE GOVERNMENT FOR NEXT 3 YEARS+....
5 reasons to invest in property now?
The combination of the following five key issues converging makes a compelling proposition for buyers, and should subsequently frame an investor's view of the horizon.
We anticipate demand to intensify quite significantly in the coming months as a result of...
1. Confidence returning to the Australian market due to a stable government and the fact that there will be no changes to negative gearing and no changes to capital gains taxation policies. And unlikely to be revisited again by either side of politics, for a very long time.
2. First home buyers deposit reduction requirements, removing LMI costs (Loan Mortgage Insurance), as result of Government election pledge to underwrite home loan deposits and taking on role of guarantor for First Home Buyers. First time buyers getting on the initial rungs of the ladder, is exactly what enables everyone else to move up the ladder.
3. Increasing certainty there will be two interest rate cuts later this year, reducing the home mortgage costs of borrowing money.
And the all essential Point 4 to make Point 3 above significant...
4. Strong recommendations for lenders to improve accessibility to credit, by reviewing and relaxing the policies to enable buyers to financially qualify and secure a mortgage. (Have these restrictions adversely affected you?)
5. House pricing is currently softer than it has been for years. Over the last 12 months in large parts of the country the property sector growth has undeniably slowed, forcing vendors to soften pricing to sell. HOWEVER...
...the true demand never went away. The prices and perceived value for most properties weren't actually the issue, it was simply being 'throttled' with the restricted access to buyers securing funds.
So... As the tap re-opens with lending facilities becoming accessible and on stream again, watch loan applications increase again, expect to watch the prices firm and start easing upwards. And it'll inevitably happen, far faster than you think. By the time you read about it in the news papers, it's already in the past, and old news.