How Will the New Budget Affect Property Prices?

Source:REIV

Melbourne Market Wrap March 15th May, 2017

A clearance rate of 78 per cent was recorded this week compared to 78 per cent last week and 72 per cent this week last year. There were 872 auctions reported to the REIV, with 684 selling and 188 being passed in, 78 of those on a vendor bid. The Geelong suburb of Belmont is regional Victoria’s top auction suburb this year with 46 sales under the hammer, followed by Torquay with 33 sales. (REIV)

New laws to stem underquoting came into affect as of May the 1st this year. This appears to be be causing some major headaches for agents especially in areas where properties have been underquoted by up to 20 per cent in the past.

Real estate agents now must give three examples of comparable properties used to appraise the vendor’s home and must quote within the vendor’s reserve price. If the selling range ceases to be reasonable the agent must inform the seller in writing, update the authority and advertised price. This also means that if an offer is made on the property and this offer is rejected the by the vendor the agent must adjust and advertise this new price.

According to Consumer Affairs if an agent does not comply with the new laws, they risk a penalty of more than $31,000. For more serious offences – such as setting an unreasonable estimated selling price, or advertising a property below the estimated selling price – the agent may also lose any commission they received for the property sale.

New underquoting laws.

Source: PIXABAY

How Will the New Budget Affect Property Prices

Treasures Scott Morrison (ScoMo to his mates) handed down the budget last Tuesday and wasn’t it a ripper! Questions still remain though on what it all means for first home buyers, investors and downsizers but there appears to be something for everyone.

Treasurer Scott Morrison described this year’s Federal Budget as about “making the right choices to secure the better days ahead” labeling it a “fair” budget.

There was no hiding the main aim of this year’s Budget, to win votes. Housing Affordability became the Government’s focus and centerpiece, but whether this will appease First Home Buyers looking to get a foothold in the property market is yet to be seen. Has the government done enough to win votes and stop the noise from this sector of the market, only time will tell. 

Key measures proposed in the Federal Budget:

 A First Home Super Savers Scheme

Under this program first home buyers will receive tax breaks and be able to save up to $30,000 over two years in a superannuation-like scheme. The federal Government believes this will help FHB’s increase their savings by 30%

Concessions for people over 65 downsizing their home

As part of a move to free up property across the country, the Federal Budget also plans to allow those over the age of 65 to make non-concessional contributions of up to $300,000 into their superannuation fund from the sale of their principal home.

Tougher rules on foreign investment in property

A levy of $5000 per annum on all future foreign investors who fail to occupy or lease their property for at least six months of the year is one of the proposals in the Federal Budget that aims to address the impact of foreign investment. This might be very difficult to police and regulate.

Continuing with the theme of targeting foreign buyers, Scott Morrison outlined further changes that include a 50% cap on foreign buyers in new developments. Making things very interesting for international marketeers selling to overseas investors.

There was also some “tweaking” to negative gearing which will be of a concern to some investors. Claiming travel expenses and limiting deductions for plant and equipment for established investment property have been abolished, the latter is expected to have a significant impact on the second-hand property market should these measures be passed in the senate.

This is a blow to a group of investors who have bought property, usually off the plan on the back of promised rental returns, depreciation tax breaks and capital growth. These same people are now finding that their once promised golden goose has become a lame duck! 

Quantity Surveyors Washington Brown provide an indepth look as to how this new change will affect property –

The Depreciation Party is Over

Interest only loans are being revised by banks to principal and interest, values for many these properties have fallen and the hope of selling to another investor at a reasonable price has just evaporated. New or off the plan apartments will become a more attractive purchase option as under these latest Budget measures plant and equipment can be written down for this sector of the market, expect the extra burden of holding an investment property to be passed onto to renters. Oh and by the way, spare a thought for the thousands of quantity surveyors in Australia who in effect lost their jobs overnight as a result of this proposed change.

Many of these measures combined with the current APRA regulations to curb investor borrowing will have an impact on property prices should they be passed. Unfortunately though for those still hoping for a property crash you may have to keep waiting, an annual migration inflow of 120,000 people per year in Melbourne will see rental prices increase substantially and property prices continue to grow although now at a more modest pace.

Should the government’s proposed infrastructure spending jump-start the Australian economy and there is further global economic growth, expect the lower unemployment and wage growth in Australia to push property prices higher. Projections released in the Budget last week all point to a stronger Australian economy over the next few years which will include wage growth, so this is more than just rhetoric!

Feel free to call me if you have a property question on 0418 740 606 or 9863 7514

Street Advocate Client Reviews

Hi Peter,

Just would like to express my sincere gratitude towards your service again.

I have sold two properties both through the help of Peter. He has been very professional and a wonderful person to work with, and he would provide me with recommendations and improvement tips to maximise my sales return throughout the campaigns. Every property sale has its own difficulties, and on both occasions of my property sales, we had to overcome their unique obstacles, but Peter was superb at managing difficult situations and would come out winning  for his client. In all honesty, there might be a difference of opinion at times, but Peter is always willing to work hard and stick it out for his client to achieve the best possible result. I wouldn’t hesitate to recommend Peter to other vendors!

Thank you again!

Derek

8 Birchgrove Cres, Templestowe

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