Post-Election Wrap – What’s next for the market? - May 2019
May 28, 2019 / Written by Rich Harvey
By Guest Blogger, Terry Ryder, founder,
hotspotting.com.au and propertyU
They say a week is a long time in politics, as some of our Federal politicians have just discovered, but it’s also been true of the past week in real estate. Much has changed and it’s time to get back to business.
A short time ago real estate markets, especially in the biggest cities, were being inundated by a perfect storm which was impacting on four fronts: a federal election, the fear of Labor’s tax changes, a difficult lending environment and a sensationally negative media.
Suddenly, everything is a whole lot different. How remarkably the atmosphere has changed in the space of a week.
A Federal Election always put the brakes on decision-making and real estate activity. That impediment is now behind us.
Labor will not have the opportunity to implement its ill-guided policy on negative gearing – and, if they’ve learnt anything from their campaign debacle, they will never speak of this policy again.
The real estate industry can heave a huge sigh of relief and get on with business.
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The tough lending environment is gradually easing, as the banks start to compete again for lending business, but the climate changed noticeably when APRA announced it was scrapping its previous “stress test” buffer imposed on lenders.
This meant that borrowers applying for a loan at 3.8% or 3.9% had to be assessed at an interest rate above 7%. Why? Because the bean-counters at APRA are soul-less bureaucrats and not necessarily in touch with reality.
But now they’ve seen the light and lenders can start assessing their loan applicants at more realistic interest rates.
It also seems likely that the Reserve Bank will slice the official interest rate soon and that will be another big step in easing that third element of the perfect storm.
And, all of sudden, media has turned positive. That, if it lasts, will be a huge factor.
Journalists have a tendency to obsess over story lines. For several years they wrote endless acres of words about the Sydney boom and the affordability crisis. Then they found a new obsession, the downturn, and they indulged a feeding frenzy of negative sensation – which, among other mistakes, included extrapolating Sydney’s downturn into a national crisis.
Now, they’ve found a new passion – the post-election upturn. Suddenly markets are set to surge because of the election outcome. The bottom of the market has been reached and we’re heading into recovery.
The important thing for consumers to understand is that nothing in real estate is ever the way media portrays it.
Hotspotting research shows that, even within Sydney, there are growth stories happening. Close to 100 suburbs have median prices higher than a year ago and there is particular resilience being shown in apartments markets – there are 44 Sydney suburbs where the median price is down but the median apartment price is up.
In Melbourne, 57% of suburbs with apartment markets have median unit prices rising, not falling.
The vast majority of suburbs in cities like Brisbane, Adelaide and Canberra have rising prices. Throughout regional Australia, most locations have solid, rising markets . This is particularly so in NSW, Victoria and Tasmania.
Things are never the way the media portrays them. Their motivation is not to inform you – it’s to compel you to click on a link, with that impulse created by a sensationally negative headline.
Nevertheless, they’ve suddenly backflipped and started writing positive articles. And that speaks to the fourth and final element of the perfect storm that existed in real estate in the week leading up to the Federal Election.
How things have changed. And that means that you, the consumers of real estate, are out of excuses. It’s time to get busy again.
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