The 2022 Federal election brings Labor back into power, the first time since 2010! Anthony Albanese becomes our new Prime Minister, taking over from Scott Morrison who conceded defeat on the 21st May 2022.
Rightly so, housing affordability, for both renters and buyers, has been one of the main topics of the election. Anthony Albanese committed to various policies that may have an impact on the property market:
Negative Gearing here to stay!
Many believe Bill Shorten's loss was partly due to his commitment to modify the negative gearing policy. We believe Albo was not going to make that mistake again! Mr Albanese backed down from any possible changes to negative gearing mid way through 2021, vowing to retain the current policy for both gearing and capital gains tax.
What does this mean for the Property market? Firstly this is good news for Investors and should help to encourage investors to participate in the market which in turn can help to address the supply issue. There is mixed expert analysis on whether this is good or bad for the market; here at Niva we believe Property Investors, many of whom take a serious financial risk and work hard to invest in property, should indeed have the benefit of negative gearing. If it ever was abolished it is likely to reduce the investors in the market which can only result in a drop in supply.
Help to Buy
Labor's Help to Buy scheme is designed to help people buy a home sooner by cutting the cost of buying a home by up to 40%. How is it planned to work?
- Eligible buyers need a deposit of 2%
- Applies regardless of where people live
- The Federal Government provide an equity contribution up to a maximum of 40% for a new home and 30% for an existing home
- Price capped and income tested, open to 10,000 Australians per year
- Purchasers also avoid Lenders Mortgage Insurance which can be another big cost
What does this mean for the Property market? First this seems like a great initiative for younger Australians with minimal savings, helping them to buy a home sooner and enjoy everything that home ownership can bring to one's life. There is mixed debate, however, as to whether this could also increase demand and contribute to price growth... time will tell here and it will be interesting to see how this policy impacts demand when introduced.
National Council to address affordability
Mr Albanese pledged to establish a National Housing Supply and Affordability Council, so that "...the Commonwealth plays a leadership role in increasing housing supply and improving housing affordability".
Advised by experts from a diverse range of relevant fields including finance, economics, urban development, residential construction, urban planning and social housing sectors, the Council aims to improve land supply and land use planning in order to improve housing affordability and provide a boost to national productivity and economic growth.
Regional 1st Home Guarantee, including price cap reviews
The Regional First Home Buyer scheme stands to help 10,000 first home buyers a year in regional Australia to buy a home. Some of the details:
- Recipients can save up to $32,000 in mortgage insurance
- Be able to secure a home with a deposit as low as 5 per cent
- The government guaranteeing up to 15 per cent of the purchase price.
Summary
There are great initiatives here for owner-occupiers, and also some good points for investors, and we believe it is important to have a balance. The Niva team look forward to seeing how Labor can work with the real estate and property associations to introduce positive change to the sector, especially regarding housing affordability and access to housing supply.
