29 May Housing policy …….Election Miracle or Election Disaster?
Wow … I didn’t see that one coming! The Coalition loses 50 consecutive Newspolls, and then somehow wins the 2019 Federal Election, after a 5 week election campaign.
So what are the ramifications? Judging by the stock markets immediate reaction, it’s party time. The ABC Headline says it all “Share market surges on election results …and the ASX200 reaches its highest level since 2007” [ABC News Michael Janda].
The article goes on to explain that “Banks, property companies and health insurers are leading the gains”.
“The property sector … emerged from the election as a winner, with the threat of negative gearing restrictions removed – listed real estate agency McGrath jumped 19%”
From a market perspective, “the prospect of a Labor government was engendering concern on a range of fronts” including further pressure on house prices care of negative gearing changes and capital gain discount changes.
But also fear that a Labor government would see further pressure on banks … a key source of housing finance … care of royal commission recommendations.
So for those that worried that “negative gearing changes could tip Australia into recession”, the fear and loathing has dissipated.
To me the Aussie election struck me as similar to the 2016 US Presidential Election, which was described as “angry, passionate and divided”.
So it is a brave man that comes out trumpeting that it is all good news, and that the election has solved all our problems. For those passionate on climate change and other issues (from schools to dental care), it is a disaster.
Beyond dispute, is that in Wentworth it was one of the closest fought battles in living memory, with David Sharma not confirmed as the winner until Monday lunchtime.
Certainly with the likes of David Sharma labeling themselves as Modern Liberals, there does appear to have been some movement to the center.
In terms of a focus on property as an issue, I agree with the experts that are arguing for “a shorter, shallower price downturn” flowing from the Coalition’s victory.
As CBA senior economist (Gareth Aird) stated “with reforms to negative gearing and CGT off the table, a likely interest rate cut on the horizon and a scheme to encourage first home buyer … it is reasonable to think prices would not fall much further”.
Similarly AMP’s Shane Oliver stated “Some of the threats to property are starting to abate”, and “tightening of credit conditions won’t get much worse.”
Now that is not to say the market is entirely back to party time. My observation is that while the perfect home is still selling well, vendor expectations are still in the process of re-aligning. So there are still sellers out there, with 2017 price expectations, and unless the property is ticking all the boxes, then those expectations can be problematic.