In life, whether you back a winner or don’t, more often than not it’s how you use the result to your advantage to achieve the outcome that you want. No matter what side of politics you are on, nearly everyone would agree that the result was decisive and that is a positive. So, moving forward, a decisive election result means that public confidence is enhanced.
From a big picture economic perspective, there is a common thread through consumer sentiment and public confidence coupled with supply and demand. If one changes, then it tugs the others in a different direction. It was noticeable that during the ‘pre-election’ election campaign as well as the election campaign (post announcement), as it relates to the property market, that confidence was low due to the sentiment that change was imminent.
I have worked in the property industry for the last 32 years and 27 of those as a valuer. In the lead up to every state and federal election, the sentiment will always sway between what if there’s change and what if there’s not. Once a result is achieved, especially a decisive one, it swings back to “Lets get on with it” which is where we find ourselves now.
I have a broad understanding of other property markets in Australia from what I read and talking to people, but it is South East Queensland and Brisbane in particular that we know intimately. When consideration and measurement is given to influencing factors for the property market, it appears that Brisbane (Australia’s third largest capital by population) has just been given a Green Light to “throw off the shackles” and realise the potential it has had for the last decade.
There is no doubt that the election result, APRA (Australian Prudential Regulation Authority) changes to the serviceability assessments for residential mortgages and speculation the RBA (Reserve Bank of Australia) may cut official interest rates is positive for the Australian property market. Focusing on Brisbane, those macro items underpin the planned infrastructure spend by the State Government of over $45 billion over the next 4 years. In addition to that, major precincts coming online such as Howard Smith Wharves and those in planning or development like Queens Wharf, Brisbane Live and Dexus Waterfront Precinct will change the make-up of Brisbane.
So, to recap. Essentially, it will be business as usual for property investors as they continue to take advantage of negative gearing on all property. Because of this, growth should follow for existing property in areas that are more affordable (lower entry price) and are currently providing a 5% or better gross return or those areas that show good value for money by drawing comparisons in the surrounding market. This could mean that the regional towns that saw enormous growth during the mining boom could make a resurgence, but that is a classic case of ‘buyer beware’ as those markets are notoriously volatile!
Expect the market for new units to continue along subdued as investors have become weary of the larger complex new unit developments. New housing should see some growth in areas that are well serviced by amenities through both investor and owner occupier purchasers. Property in Brisbane and Adelaide is certainly more affordable than other capital cities. Brisbane property in particular has seen next to no growth over the last 5 to 10 years due to southern Australian capitals enjoying the buyer demand and subsequent double digit growth. With major infrastructure plans taking shape in the Brisbane Local Government Area watch this space, the sleeping capital of Queensland is about to wake!
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