Why confidence is returning to the property market

The Melbourne property market is bouncing back in the wake of the federal election result.

The market doesn’t like uncertainty and the election result has eliminated much of this. The Coalition win returns an air of political certainty and confidence back to the market. A Labor victory would’ve brought with it fear and uncertainty around negative gearing and Capital Gains Tax. With that threat now behind us the market has turned from negative to positive.

The recent fall in house prices have in part been credit related combined with the relentless daily doses of negative press which eroded consumer confidence. The media are now publishing upbeat articles forecasting a recovery based on and supported by several developments which form part of a stimulus package which is boosting buyer confidence:

  • The removal of the fear of changes to negative gearing and Capital Gains Tax
  • Tax cuts to almost 10 million workers plus a 3% increase to minimum wages
  • The First Home Buyers lending scheme which allows first home buyers to purchase with a 5% deposit
  • Home buyers are set to receive a borrowing boost after the regulator APRA announced a relaxation of the loan serviceability rules to make it easier for buyers to qualify for a loan
  • RBA’s cut in interest rates, down to a historic 1.25%, with more cuts expected in the coming months
  • Big infrastructure spending commitments by both State and Federal Governments

Collectively all these changes are a huge stimulus to the property market and the general economy. Suddenly the outlook for property is not so bad.

With the media now becoming optimistic about the property market and as credit starts flowing again, as it inevitably does every property cycle, prices are set to go higher than most people anticipate. As we previously stated, all property slumps are temporary, while the long-term increase in property values is permanent.

This is a time of great opportunity, yet it is not easily recognised and will be missed by many buyers. Don’t be one of them.

About The Author
Paul Kounnas

Paul Kounnas

For nearly 40 years, Paul Kounnas has been helping people buy and sell property in and around the Manningham area. In 1993 Paul established Hudson Bond Real Estate and he is recognised as one of the most respected, prominent and knowledgeable members of his profession. A licensed Real Estate Agent and member of the REIV and the International Real Estate Federation (FIABCI), Paul provides regular expert advice and information on all matters relating to real estate.

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