Thought to be coming up sometime in May 2019, the federal election is sparking controversy among property experts, and it would seem, panic among buyers. So, how will the federal election impact the Australian property market? Potential new homeowners or investors looking for property are worried about the impact a change in government would have on both prices, and for investors, a potential change in tax laws for rental properties. Ray White Surfers Paradise CEO, Andrew Bell, has noted an emerging sense of urgency among some buyers eager to lock in a purchase sooner rather than later.
“Elections often create uncertainty in the market, but this time it’s a little different because of proposed changes mooted by the Labor Party,” said Mr Bell. “The market is well and truly factoring a Labor victory and the likelihood of major changes to the taxation regime for property owners. Many are buying now to take advantage of the grandfathering provisions proposed by Labor for existing properties.”
Among many issues that are causing uncertainty in the Australian property market is Labor’s plan to abolish of negative gearing on established properties and a reduction of the capital gains discount from 50% to 25%. Negative gearing will remain in place for newly built homes and apartments and also for investors who already own properties, the current rules for capital gains tax and negative gearing will still apply.
“The proposed changes are the most significant in a generation for the [Australian] property market and that’s prompted many buyers to bring forward their plans to step into the market,” said Mr Bell. “We’re certainly seeing an uptick in inquiry from investors keen to buy now before any of the proposed changes are made.”
Mr Bell said the election stimulus has coincided with a cyclical increase in buyer enquiries for Gold Coast property from local and interstate investors. Though he has warned, the proposed changes to property tax rules will impact the broader property market, especially for those who are unprepared.
“The market is definitely more anxious about what’s coming but there are many buyers looking to lock in their position now, well ahead of the changes. There are compelling reasons still in play to support the Gold Coast property market going forward, and we don’t believe that will change any time soon,” said Mr Bell. “Strong migration rates, combined with the strength and diversity of the local economy should see buyer activity hold up well throughout the year.”
Whether buying a property on the Gold Coast or other areas of South East Queensland, the federal election will probably impact the price you buy and/or sell your property for in the coming months. The good news is that buyers of new property are still able to negatively gear their investments for tax purposes. This is ideal if you are buying a new property to downsize to, but want to rent it out for a few years before you sell your family home and move in there. It is also good news for property developers, because if these changes are made it will make new and off-the-plan property even more attractive to investors.