How this election has impacted property

How this election has impacted property

The election has been an uncertain time for property investors, with potential changes to negative gearing and superfund rules meaning buyers and sellers are taking a backwards step, according to real estate experts.

And the biggest hit to the property market has been uncertainty, Property Buyer Managing Director Rich Harvey said.

“We’re now in a quagmire of reduced confidence and property trades very much on underlying confidence,” he said.

This sentiment shift hasn’t just hit the market for the past two weeks – the last two and a half months in Sydney have been slow with stagnating listings. Over the past year, property listings have plummeted by about a third, Domain Group data shows.

“There’s not a lot of stock and the discussion around [changes to] negative gearing has created a lot of uncertainty. Changes to superannuation would also be retrospective, meaning many people have had to rethink their strategy,” Mr Harvey said.

With the majority of economists predicting an interest rate cut in August, and spring around the corner, a resurgence could be on the cards shortly. 

In the meantime, many sellers and buyers will be sitting tight, he said.

On the upper-end of the market, for listings in the $1 million to $10 million bracket, this resurgence may take a little longer to appear, Real Estate Institute of NSW Board Member Malcolm Gunning said.

High net worth individuals, who often buy real estate investments in their superfunds, are waiting on details of any potential superannuation changes before moving back into the market.

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“The other big portion of the market upper-end are foreign investors,” Mr Gunning said. These buyers are often purchasing in the $10 million plus bracket and are facing heightened taxes and fees.

“The discussion around [new taxes] makes second page of the Chinese newspapers and the feedback I’m getting from the, [Real Estate Institute’s] international chapter, is that it seems as though Australian doesn’t want Chinese investment,” he said.

“Chinese buyers still have money but they’re concerned about the Xenophobia.”

But in the investors heartlands, activity is still surging unperturbed by political debates, Stepping Stone Property Investment Advisor Dave Ward said.

“Agents in Victoria and Queensland, since the elections, have said the market is strong despite the uncertainty and remains bullish,” Mr Ward said.

“Election results can be a bit of an excuse to hold off for some people, but for many areas it’s not having an effect,” he said.

The only concern could be the interests of the independent parties and their thoughts and policies on the real estate market.

While Labor announced a plan to change negative gearing so only purchasers of off-the-plan or new builds could access it, along with existing investors, several smaller parties have also made property announcements.

In June, the Australian Greens proposed to end negative gearing for any new investment properties to save $2.9 billion and build 7000 homes for the homeless by 2020.

Most other parties’ property leanings are yet to be revealed, but likely weren’t too concerning, Mr Ward said.

“All of the noise coming from the press is that Liberal at worst will form a minority government, if not a slim majority,” he said.

 

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