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Realestate Today


By the time 2018 bid us goodbye, property prices across Sydney and Melbourne were falling while the rest of Australia remained relatively stable. In just a few weeks, the Financial Services will release the much anticipated final report. Additionally, pundits are betting on a change of government with the upcoming Federal election. So, what does this mean for the Australian property market? Read on.


1. Politics will Have a Major Influence

The forthcoming elections are going to impact the market considerably. If history has taught us anything, it is that people have a tendency of sitting on their hands when it comes to elections.

This is due to general uncertainty about what is to follow. For instance, Labor’s desire to limit negative gearing tax incentives to new investments while halving the capital gains tax is likely going to cause a period of extended stagnation.

Additionally, the Federal Government is likely going to have a difficult time implementing the banking royal commission’s recommendations during the first half of the year. It is a delicate balancing act where the Government has to ensure future prudence while also making sure that people are still able to access credit easily.


2. The Continued Rise of First Homebuyers

It was only recently that first-time homebuyers were sidelined in the real estate market due to some political and economic forces that were at play.

That, however, changed in 2018 with the introduction of the fiscal stimulus. This package was designed to assist first-time homebuyers while limiting investor activity. This has resulted in less competition in addition to the correction of prices.

At the moment, about 25% of all property purchases can be attributed to first-time homebuyers.


3. Rates Will Stay The Same For The First Half of The Year

The Reserve Bank of Australia has not changed interest rates for more than two years. The two primary reasons behind this occurrence is stagnant wage growth and a market which seems to be slowing. It is highly probable that this will remain to be the case for the first half of the year. And this is the kind of news that property owners want to hear.

Nonetheless, it is nearly impossible to predict beyond that as a few weeks in economics and politics is a long time, let alone a few months.


4. Rental Vacancy Rates to Rise

In the past three to five years, we have witnessed a heightened and sustained rate of apartment development. Approximately 50 per cent of these properties were constructed by investors.

The consequence is that the market has become a lot more competitive as renters now have more choice. Landlords, therefore, need to adopt a more realistic view of their rent prices. Tenants have more bargaining power now.

And even though one may be tempted to try and wait for the ideal rental price, investors should listen to what their agents are saying as they are on the ground seeing what is happening first hand. As such, refusing to budge could see an investor lose a month’s rent.

Also, there is a likelihood that investors who came into the market without a buffer could be forced to sell this year because they might become unable to balance their books.


5. Mortgages Will Become Paid Down

As mentioned earlier, we are experiencing one of the most favourable periods due to the low-interest rates. These rates are likely going to remain the same for the first half of the year. However, beyond that, it is hard to tell. Homeowners, therefore, need to take advantage and pay down as much debt as they can while this favourable environment lasts.

It is highly likely that banks and accountants are already encouraging their clients to pay down their debts before the rates inevitably rise.

Real estate in the Australian market has been in a state of change for the past five years, and it seems things are headed for the better. It is especially favourable for first-time buyers who have, for years, been sidelined. The recent changes in legislature make property investment an affordable investment. However, it is important for investors to use reputable agents who have intricate knowledge about the industry. Therefore, consider using Agent Select to get yourself the best human resource possible.

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