Australian property owners have undergone some testing times over the past 18 months. Buyer confidence has been beaten around by lending changes, leadership battles and chatter about our mythical “property bubble”. If you had read some of the reports leading up to the latest election you would have been certain that it was the end for the market. In reality, it’s nothing that we haven’t seen before. The media and selective political parties have leant on pessimistic data to create a useful fear in the minds of Australians.
Labor’s impending changes to property investors proved to be a driving factor in impacting decisions of able investors. Talk of changes to negative gearing and capital gains tax concessions led to a paralysis of Australian investors through a newfound fear of uncertainty. There had been a widespread “wait and see” approach surrounding the market, as Australian’s sit on their hands anxious to see the leadership outcome.
It seems that in the wake of the election result, this fear of uncertainty has cleared reasonably quickly. With the election over, it’s onto the next topic for media outlets. The focus has been weaned away from our seemingly impending downturn and onto something more topical. The result? Forecasts represent market stabilisation, with the possibility of an upswing. Channel 9 Finance has pinpointed July to be the strongest month of housing performance for 2019, while CBA has experienced their strongest week of home loan applications in almost a year following the election. Funny how that can happen, as always the drastic state of our market was exaggerated from the start.
So what does this mean to us as property investors?
I think we have hit the bottom of the cycle. After the recent market correction, dampened sentiment has deflated the market significantly. As buyers come to terms with our current state of affairs and demand recalibrates, there may be a period of stagnant demand where we see minimal price growth. A far cry from the widespread market implosion that was expected.
The best case scenario is that the strong demand from our sleeping investor sector returns, with aid from lending policy changes driven by APRA. As of the last fortnight, the credit regulator has moved to alleviate lenders assessment rates, which will allow investors much needed access to credit. A move which will be a key to bringing back national demand and ultimately a sense of certainty throughout our robust residential market.
One of the most important outcomes from this political result is the return of confidence; for not only the industry but the property market itself. In my eyes, confidence breeds confidence and nothing brings buyers more comfort than clarity around leadership and the future of the market.
The fire of the property market has well and truly been stoked. Australians now know what we are dealing with in terms of capital gains and negative gearing. That alone would provide motivation for buyers across the nation. Throw in more accessible lending, continued jobs growth and a market recovery, now is as strong a time as ever to invest in well researched property.