By Graeme Salt
Well they are good news for buyers at least – but that’s the whole point of this budget. To make homes more affordable by removing the financial advantage that investors have enjoyed.
Sydney auctions sank to their lowest clearing rate (47 per cent) in more than six years this weekend and Melbourne had its weakest week in almost five years.
The supply of properties is now exceeding demand, keeping a lid on prices. Much of this is due to the recent federal budget which has
- Drawn a line under negative gearing entitlements
- Majorly restructured Capital Gains Tax
- Banned investors buying their property via their Self-Managed Super Fund
Because investors are not bidding on properties as they were, Westpac has reported a one-fifth plunge in investor loans since the budget.
There has been a lot of controversy about this budget. But surely as a country we need to ask a very obvious, but often ignored question – what is housing for? Is it a safe and secure place for people to live, or is it a place to make a small minority of people rich?
The answer is important because the housing market in the past two decades has shown that it can’t be both.
For 25 years, investors have flooded into the market, pushing up prices, outbidding first-home buyers and making housing less affordable. Higher house prices mean bigger capital gains when an owner sells, which just attracts more investors.
Right now, the balance is being tipped back in favour of those who want to buy a safe and secure place in which to live.
And it is showing with my clients who have successfully bid on a:
- Eastern Suburbs detached house
- Port Macquarie duplex
- Queanbeyan unit
Of course, prices could fall further. But CBA economists predict national dwelling prices will be flat over 2026 with prices stabilising and rising in 2027.
And, the average Australian property downturn typically lasts about 12 to 18 months, with peak-to-trough price declines historically averaging around five to 10 per cent.
So, today may create good buying opportunities. Tomorrow maybe slightly better opportunities. But there’s no guarantee how long they will be around for.
Graeme Salt is an award-winning mortgage broker. For a no-obligations consultation on your home loan needs, please contact him on 02 9922 5055.
