Monthly Update: June 2019
By | 10th Jun 19

Your monthly property update.

Clearance rates have been over 60% for most of last month and we had a few weeks where the clearance rate was at 64% which is the highest clearance rate I can remember in the last 6 months. There’s been quite a lot of positive press after the election results which saw the Liberals in a surprise win. This was a big positive for the property sector as Labour was going to abolish negative gearing, half the capital gains tax concessions and introduce is an inheritance tax of 40%. All of this would have had a very negative impact on the property market as we saw in the late 80s when Paul Keating tried to abolish negative gearing and reintroduced it 18 months later when rents sky rocketed and investors deserted the market.

 

There’s definitely some positive news on the interest rate front as now a number of property experts and economists are predicting 3 - 4 interest cut rates by the RBA in the next year or so, with the first one coming already this month. This will be positive as reduced interest rates always stimulate more demand in the property market which will get our property market out of the bottom where I think it is now. These are similar conditions to September 2012 at the last bottom and then we saw a 5 year up cycle. APRA has also said that they will recommend removing the cap of around 7.5% which is well above the 2% cap of normal interest rates. They will let the banks set their own caps which will be down to about 6.25% and could potentially drop closer to 5.5% with 3 - 4 interest rate cuts.  This will basically open the door to many more investors and other homebuyers getting into the market.

 

There’s also positive news for the First Home Buyer market as the Liberal government has pledged to guarantor a deposit for at least 10,000 loans for first home buyers each year. These loans will be guaranteed at 5% deposit and first home buyers will save over $10,000 in most instances in lenders mortgage insurance to cover the risk of only having a 5% deposit usually. I think this will start in the New Year and it will assist about 10% of first home buyers in to the market which will definitely be a positive for the entry level market where they already have stamp duty concessions up to $750,000. So overall, there are a lot of positive developments which will impact the property market in a positive way and we should see some price increases in the year ahead in many suburbs.