Author – Graeme Salt
Monday after the election – and the Origin Finance phones were ringing way more than normal.
In the run-up to the election, Origin brokers had noted many potential buyers sitting on their hands, waiting to see the election result.
Certainly, had the ALP been elected, at best a brake would have been put on house prices, at worst we were looking at further price falls.
With the return of a Liberal Government, the demand for property which had been pent up over the past few months looks set to be released.
I am a floating voter so have no real axe to grind on these issues. But I do know that, probably for the past year, many potential investors told me they were holding off buying property until they understood the implications of Labor’s proposed removal of negative gearing and Capital Gains Tax concessions.
Now we are seeing these potential investors throw their shackles off. Undoubtedly this will be positive for house prices.
But, it’s not just the election that has provided a shot in the arm for property. All in the same week, the Australian Prudential Regulation Authority announced policy changes that will boost people’s borrowing power, while the Reserve Bank telegraphed that it would be cutting interest rates soon.
One commentator calculated that APRA’s changes will boost a couple’s borrowing capacity by an extra $122,000
At the same time, some of the main factors that caused the fall in house prices remain; there is still an oversupply of apartments – and while lending is easier, lenders are way more cautious than before. Corelogic calculate that the median time on market for a dwelling nationally is 60 days, up from 35 days at the same time a year ago.
But there is light at the end of the tunnel – AMP Capital chief economist Shane Oliver predicted the market would hit the bottom by year-end, rather than 2020.
How quickly we reach the end will be determined by purchasers with their new-found buying power.