What a Labor elected government means for the property market
Australia has voted and Anthony Albanese’s Labor Party will lead the country for the next few years.
So, how will this result impact the property market, if at all?
In 2019, Labor’s mooted changes to taxation policy heading into the election, particularly those relating to a tightening of negative gearing and capital gains tax discounts acted as a handbrake on confidence and listing volumes pre-election.
In 2022, with an absence of taxation reform and a relatively neutral approach to policy reform relating to property investment and ownership, markets have functioned without significant disruption.
Interestingly, when you compare the weekend just gone to the election weekend in May 2019, the amount of property’s across Australia heading to auction increased 209%, from 930 in 2019 compared to 2,879 this year, indicating there was more certainty and confidence within the market this time around.
There is little concern that the new government will have any major effect on the property market in the near future. However, with housing affordability one of the main concerns for Australians, the Labor government has promised to enact the below policies – centring on first-home buyer schemes and affordable housing.
Help to Buy
Anthony Albanese pledged that a Labor government would cut the cost of a mortgage by up to $380,000 for some eligible Australians under its ‘Help to Buy’ scheme.
The program will provide eligible home buyers with an equity contribution of up to 40% of the purchase price of a new home and up to 30% of the purchase price for an existing home.
Buyers will be able to purchase a property that they intend to live in with a deposit of as little as 2%. Participating lenders finance the remainder of the purchase.
During the period of the loan, the home buyer can buy an additional stake in the property when they have the means to do so. Before that point, they will not have to pay rent for the portion of the home owned by the government. The government would recover its equity and its share of the capital gain when the house is sold.
National Housing Supply and Affordability Council
Albanese pledged to establish a Council to address the supply and affordability issues. The Council will include experts in finance, economics, urban development, construction, urban planning and social housing sectors who will work closely on setting targets for land supply in consultation with the states and territories.
Regional First Home Guarantee
Labor has promised to help 10,000 regional Australian families buy their first home under an expansion of the First Home Guarantee. The scheme aims to triple the number of places that Australians living in regional areas received last year under the scheme. The scheme will see approved applicants purchase a home with as little as 5% deposit, without needing to pay LMI.
Price cap reviews
Labor promised to conduct six-monthly reviews of the First Home Guarantee price caps in both the capitals and regional areas that determine the maximum price an eligible applicant can pay for their new home.
If you would like to discuss your next property move, contact us today.
To keep up to date on the latest property news, and hear about property in your area, sign up here.