In the lead up to the federal election there was a degree of stagnation across both the residential and commercial property markets with house prices dropping in the major cities and clearance rates at commercial auctions much lower. The looming possibility of changes to franking credits and capital gains taxes had people feeling nervous that their pockets could soon be feeling a lot lighter. Therefore, many Australians were waiting to see the outcome of the May 18 election before making any financial decisions.
However, with the election now done and dusted, and the Coalition remaining in power, a level of certainty and stability has come back to the market. The constancy of a familiar government will boost confidence in the property market and should see vendors and buyers reengage. Add to this the likelihood of interest rate reductions as early as this month and buyers, investors and developers are feeling a lot more confident about the future.
Property investors will be keeping an eye on where the billions promised in infrastructure spending is distributed, which may present growth opportunities in suburbs and regions which get a funding injection. The Coalition’s First Home Loan Deposit Scheme and APRA removing the 7% serviceability guidance may also have some effect on the housing market, however this remains to be seen.
For private lenders, a confident and stable market is always a good thing. It means borrowers are feeling better about the value of the properties they are purchasing and lower interest rates on current investments are helping to keep dollars in their pockets. At Private Mortgages Australia we are confident that now the results of the election have been finalised we will see an increase in loan applications from borrowers and also an increase in the amount being borrowed.