The real estate industry and property market were hot topics in the lead up to last week’s federal election.

What is in store for the industry now that the Coalition has been returned to Government?

The overarching belief is that property markets will pick up by the end of the year, spurred on by three main factors:

1. no changes to negative gearing and capital gains tax
2. a likely interest rate cut
3. new scheme to encourage first-home buyers.

Negative gearing and capital gains tax

Labor had proposed to abolish negative gearing on established houses and halve capital gains tax discounts to 25 per cent if they won government. To put that into perspective: a person earning $90,000 a year who makes a capital gain of $100,000 would pay tax of $29,250 under Labor’s policy, instead of the current $19,500.

This proposed policy was causing uncertainly and confusion within the market. It is now off the table, which will help to restore confidence and encourage investor activity.

Interest rate cut

It is widely thought that the RBA will cut the cash rate to 1.25 per cent next month, after sitting on 1.5 per cent since August 2016.

First home buyer scheme

The new first home buyers scheme allows new buyers to use just five per cent deposit for a home loan. The scheme will start on 1 January next year and is targeted towards first home buyers earning up to $125,000 or $200,000 for couples. The value of eligible homes will be determined on a regional basis, allowing for different markets across Australia.

Available to up to 10,000 first home buyers each year, the National Housing Finance and Investment Corporation will partner with private lenders for the scheme, prioritising smaller lenders to boost competition.

If you would like to explore your options within the property market, whether as an investor, first home buyer or family home buyer, please make contact with us. We would be delighted to join your property journey.