Post-Election Market Update
With the Federal election behind us, the property market is likely to benefit from a significant boost in investor confidence. In what’s being touted as the ‘ScoMo Surge’ the ASX jumped $33 billion to a 12-year high following the Coalition’s surprise win last weekend.
“That confidence in share investing is also likely to be reflected in property investment going forward,” says LJ Hooker Avnu agent Nick Gittoes.
The surge was unexpected, as was the election result, but investors are no longer in limbo now that the uncertainty around Labor’s talk of eliminating negative gearing has been silenced.
“Without Labor getting in, the idea of negative gearing being abolished is non-existent, which is obviously a big win for investors,” Gittoes says.
If Labor had been elected, Gittoes says there would undoubtedly have been a spike in investors purchasing property between now and January 2020, when negative gearing was due to have been abolished.
Now that the window of opportunity isn’t closing, Gittoes anticipates a steady increase in investment that will continue into next year and beyond. “It’s a long-term positive outlook rather than a short-term spike,” he says.
LJ Hooker Avnu agent Adrian Bridges agrees, saying a lot of potential buyers were waiting for the election results before moving forward.
“A definite change in sentiment has come about now that the election is out of the way,” Bridges says. “The Liberals getting in has delivered consistency and has alleviated fears about Labor’s proposed policies, which many people thought could have caused a further fall in prices. We needed some stability and consistency for the market to regain some momentum.”
LJ Hooker Avnu kicked off the post-election week with a five sales in 72 hours. This included 17/14 Warringah Road, Mosman, an apartment that sold for $880,000 – $80,000 over the asking price – after being on the market for just five days.
“We’ve seen an immediate boost in investor confidence,” Bridges says. “I think at the very least prices will stabilise and only time will tell whether we see an increase in the short to medium term.”
The return in consumer confidence can only be good news for the property market going forward, however. “Stabilisation in government allows people to forward plan,” Bridges says. “We’ve had some great sales this week and increased inquiries on all of our properties so our outlook is positive for the remainder of 2019.”
If interest rates are cut as many are predicting, the housing market is likely to regain even more of its bounce.
Gittoes says the certainty around who’s going to be running the country will give sellers greater confidence to sell and buyers more confidence to buy, particularly if rates are dropped and money is more easily attainable. “Lending restrictions have been a major reason why things have been taking longer to sell,” Gittoes says.
Banking regulator, the Australian Prudential Regulation Authority (APRA), has suggested that lending restrictions could soon be relaxed, which could further boost the ability for would-be buyers to borrow. APRA will deliver its final verdict on this in June.
Sydney’s property market has dropped 14.5 per cent since the market high in 2017, with CoreLogic saying Sydney’s average house price is now sitting at $880,369. The average apartment in Sydney now costs $683,739. Analysts are predicting property prices to return to positive growth by the end of 2019.
LJ Hooker Avnu agent Anthony Godson says the period between now and spring presents an opportunity for those thinking about selling.
“There are traditionally lower levels of stock on the market in autumn and winter but selling when there’s less competition is often the best time to achieve a great price,” Godson says. “With other owners sitting on the fence until spring, you can have the advantage of attracting the best buyers in the market first.”
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