Where is the Property Market Likely to Head Post-Election?
By Peter Sarmas on 28 Aug 2013
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It seems the 2013 federal election is a bit of a lame duck when it comes to affecting consumer sentiment in the residential housing market.
Historically, confidence in housing slips in the run up to an Australian Federal election. Home buyers traditionally become cautious about the uncertain political environment and sit on their hands until a decision is made.
Not this time round, it seems. The pending decision on who is in charge of the nation doesn’t seem to be slowing the growing momentum in the housing market.
How is the Housing Market Faring?
Recent figures by Australian Property Monitors (APM) showed home prices rose nationally by 2.8 per cent over the June quarter, bringing growth to 5.4 per cent year on year, with urban markets on the East Coast showing the most promising signs of growth.
Likewise, the Real Estate Institute of Victoria revealed auction clearance rates in Melbourne are at a robust 76 per cent for the weekend just passed, up from 56 per cent last year.
On the ground, even agents have notice the positivity in the market. Real estate magnate John McGrath recently told a room full of financial brokers that homes in the NSW capital up to $1.5 million were red hot.
“I haven’t seen [the market] this hot since the last real estate boom and I’m not calling this a real estate boom,” said Mr McGrath.
Homes in Sydney are red hot, according to John McGrath
Photo: Nelson Minar
However, Mr McGrath also warned that the levels of current growth are unsustainable. “A bit of a growth spurt is a natural and welcome and healthy thing, it’s bringing confidence in, but one would hope and expect that we will settle into a more sustainable 5 per cent to 8 per cent growth over a longer period.”
In rural regions, the sentiments are starting to echo those in the urban spheres, at least on the eastern seaboard.
When asked whether the coming federal election will affect house prices and the market, Chris Hines, Principal of Unreal Estate in Coffs Harbour, said, “I don’t think it’ll make an ounce of difference. People are already over it and we’ve seen it in the rise in sales. It’s like people got to July and decided it didn’t matter anymore; we had the best July since we opened.”
What Voters Want
Despite this positivity in the marketplace, rising house prices continues to be one of the top issues on the minds of voters. Some industry commentators are urging both major parties to embrace election policies that promote construction, affordability and a sustained housing recovery.
“Any party or candidate that goes to the federal election without a significant housing platform in their policy list is ignoring a key part of the economy and the concerns of millions of Australians,” said Housing Industry Association (HIA) Managing Director, Shane Goodwin. “There is clearly a great deal of angst amongst Australians about how the current and future generations will be able to afford a home.”
A Post-Election Property Boom?
Politicians would be wise to heed this message because it seems the major banks are already gearing up for a post-election property boom.
Earlier this month, Westpac bettered the Reserve Bank’s official rate drop by slashing its own interest rate by 0.28 per cent, while the National Australia Bank (NAB) fired the latest shot, offering $1000 cash to customers who re-finance their home loan with NAB before September 30.
NAB noted its move in preparation for the coming “busy spring period for real estate” and was discounting its mortgage insurance by 15 per cent and waiving its $600 application fee.
Election or not, it seems consumer sentiment for property in 2013 is being driven by issues unassociated with the race to Parliament House. The slowing of the mining boom, low interest rates, unemployment figures and inflation all seem to be factors weighing more on the minds of home buyers than who is residing at Kirribilli House.
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