Toowoomba City: Keep an Eye on This Investment Destination in Queensland
03.11.2023
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Australians will head to the polls in May to vote on the make-up of the next federal parliament and to decide if there's a change in government.
Last time, when Bill Shorten challenged Scott Morrison for the top job, property markets felt strong ripple effects from the long campaign.
But this time around, the impact of the election on real estate is likely to be very different.
Real Estate Institute of Australia president Hayden Groves said Australians can be reluctant to list their home for sale or rent before a federal election, but he believed there was more certainty for the property market this time.
"It seems to be a bit of an automatic response from the market whenever we gear up towards election time, people tend to put their cue in the rack so to speak and not progress their property pursuits," Mr Groves said.
"At the moment there's really nothing from either side of the major parties that would be anything other than encouraging participation in the property market."
PropTrack economist Angus Moore said federal elections can provide a temporary headwind for activity in the property market, although he expected little impact this time.
"I don't think we'll see much of an impact on buyer or seller confidence or on market conditions," Mr Moore said.
"There aren't a lot of housing-specific policies that have been flagged for the election, so we're unlikely to see that weighing on either side of the market.
"Neither party has flagged any major changes to housing policy that would affect either how first-home buyers were going to approach the market or investors or existing vendors looking to upgrade."
Real estate was a hot topic in the lead up both to the 2019 and 2016 federal elections, when the uncertainty in the property market centred on Labor's now-abandoned changes to negative gearing and capital gains tax.
Mr Groves noted there is now bipartisan support for retaining negative gearing.
"This is very different from the elections in 2016 and 2019 and we are glad that this certainty is being offered to our markets, our businesses, investors and tenants," he said.
Mr Groves said real estate agents often suggest vendors avoid scheduling their auctions on polling day.
"Generally speaking people are pretty distracted on the day of the election casting their vote and participating in the great democracy that we live in and enjoying a democracy sausage or two on the Saturday," he said.
Mr Moore also said vendors will likely look to avoid scheduling auctions on polling day, as occurs when people are away over the Easter break or Anzac Day long weekend.
"Elections can provide a temporary headwind to market activity as people look to make sure their campaigns aren't falling on election day when everyone would be otherwise engaged. So that will provide a temporary headwind but I'd stress temporary."
While this weekend will be busy for auction activity, few auctions are scheduled to be held over Easter.
Mr Moore said vendors are looking to wrap up their campaigns before people go on holidays, amid the typically busier autumn selling season.
"It is normally quite busy as people look to get their campaigns wrapped up before public holidays and before the usually quieter winter period. This year that's going to coincide with the election as well."
After strong rises in housing prices during the pandemic, Mr Moore said overall market conditions were starting to slow.
"We've seen a lot of supply come online over the past six months which has helped ease how competitive the market is for buyers, and that's starting to show up in slowing price growth," he said.
The new PropTrack Home Price Index showed nationally dwelling prices grew by 0.34% in March, which Mr Moore noted was the slowest monthly growth since May 2020.
"That's been driven partly by the fact that market conditions have become less competitive and in large part because we're expecting to see the Reserve Bank raise interest rates later in the year."
Mr Groves said the housing market had naturally started to slow.
"We're already seeing the affordability constraint impact on markets, particularly the Sydney market and to a lesser extent the Hobart market, where growth rates based on the latest figures are not as substantial.
"I think overall most property markets throughout Australia, particularly in the Brisbane and Perth markets, will continue to be very strong throughout the lead up to the election."
So far, the major election policies centre on first-home buyer schemes and affordable housing.
Mr Groves said there was nothing other than positive news for the housing market in the federal budget and Labor's policies announced so far.
"There's good news in terms of supporting people into their first home and there's good news about supporting investors into property by not having potential laws that would curb that sort of activity," he said.
"That's why REIA is really pleased to see that all of the property-related policy from both the major parties is supportive of maintaining a buoyant property market."
The pre-election federal budget delivered short-term relief for households struggling with rising cost of living pressures.
The budget's major housing initiatives were an additional $2 billion to provide low-cost financing for community housing providers to deliver about 8000 more affordable homes and a significant expansion of schemes helping first-home buyers overcome the deposit hurdle.
The Home Guarantee Scheme program, which includes the original First Home Guarantee Scheme (formerly called the first home loan deposit scheme), has been expanded to 50,000 places a year for three years from 2022/23 and then 35,000 a year as an ongoing measure.
It includes a new Regional Home Guarantee providing 10,000 places per year - over three years - for first-home buyers and people who have not owned a home for five years, to buy a new home in a regional location with a deposit as low as 5%.
Labor in March announced its own plans for a regional first home buyer support scheme providing 10,000 places a year for first-home buyers in regional areas.
In May last year, Labor pledged to create a $10 billion Housing Australia Future Fund if it wins the election. The fund would build 30,000 new social and affordable housing properties in its first five years.
Mr Moore said REA Group was supportive of measures to increase the availability of social housing, although he did not expect the election policies to have big impacts on the broader market.
"Similarly the Home Guarantee Scheme will help some first-home buyers get into the market sooner. We don't expect that policy will have huge impacts on the broader market."
Mr Groves said the industry was pleased changes to negative gearing were off the agenda.
"At the moment we do have a rental affordability problem in this country in every city and in the regions particularly," Mr Groves said.
"Anything that constrains supply such as messing with negative gearing and capital gains tax or discouraging further investment in property would have been absolutely catastrophic this time around."
Property industry groups have been calling for measures to boost housing supply to help address affordability problems.
Mr Groves said the REIA wanted action from all levels of government to address affordability, supply and issues like stamp duty, calling for a federal-led property summit.
"We are calling on whoever forms government after May that they make a better fist of dealing with the supply side of the affordability conundrum," Mr Groves said.
"The only real way that you're going to properly address the supply issue is to have a coordinated top-down approach and that's what we'll be holding the new government to account for during their next term."
The recent recommendations of a federal parliamentary inquiry into housing affordability and supply focused largely on increasing the supply of housing to improve affordability.
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