The housing market is expected to bottom out earlier than expected following the surprise Coalition victory, with investors re-entering the market following the rejection of Labor’s negative gearing reforms and young Australians taking up Scott Morrison’s firsthome buyers grant.
CoreLogic property market specialist Tim Lawless said the election outcome was “an overall net positive” for housing. “The Labor policies around tax policies were very central to the property market. Certainty has been reintroduced, which will bring confidence and allow people to make high-commitment decisions,” Mr Lawless said.
The Prime Minister has proposed a string of measures to encourage banks to lend more vigorously, including interventions to help bring down interest rates for small business borrowers, fewer restrictions on property investors, and a first-home buyers scheme that will help a small number of borrowers access loans.
House prices have fallen 10 per cent across the nation since mid-2017, with steeper falls in Melbourne and Sydney, and analysts have been concerned values will continue to decline. “The housing market decline is still a factor of tighter credit markets and I’m not sure the government will impact greatly on credit policy,” Mr Lawless said.
“But we now have certainty around the budget announcements — a 25 per cent lift in infrastructure spending. That will certainly help things.” UBS economist George Tharenou said the Coalition’s election win was likely to stabilise sentiment and reduce the risks in the housing market. This could lift dampened consumer sentiment and consumption, which had been threatening to spill over into weakening economic growth.
“The main implication of the election is the absence of expected Labor changes, especially to negative gearing, capital gains tax and franking; rather than the Coalition’s mostly ‘status quo’,” Mr Tharenou said.
Stocks in construction companies rebounded yesterday, with significant rallies in the shares of Boral, which rose 5 per cent, and CSR, which jumped 3.5 per cent. Industry body the Urban Taskforce said the Coalition’s election win provided certainty to the housing and development industry compared with the opposition’s tax changes. “The current housing market has very slow approvals and presales, and now is not the right time
to restructure housing taxation,”Urban Taskforce chief executive Chris Johnson said.
Brian White, chairman of agency Ray White, said the election should mark the bottom of the housing market, with auction attendances — a leading indicator for housing activity — “promising” though the number of bidders was still low.
“Banking policy will be critical,” Mr White said. “A cut from the RBA will be useful but this is one downturn where interest rates had no impact.”
He said lenders’ fear of a declining housing market would be dramatically eased with the risks of Labor’s policy removed.
Mark Steinert, chief executive of residential developer Stockland, said the election result provided certainty for property investors and small business.
The Property Council of Australia said the election result showed Australians had rejected risky taxation changes at an uncertain time in the property cycle.
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