Real estate markets across the country have improved, with a “quadruple whammy of positive developments” since the Federal Election credited with boosting buyer confidence.
Auction outcomes have lifted and major developers are poised to re-activate stalled developments.
Just over 2,000 homes were taken to auction last week with a clearance rate of 63%, the highest since September, according to property researcher CoreLogic.
The performance across all regions improved, but was most notable in Sydney, with a clearance rate of 70% from 697 auctions, and in Melbourne, with a preliminary clearance rate of 63% from 971 auctions.
Property experts believe the re-election of the Coalition and the clarity it brought to lending has helped drive up numbers.
Award-winning buyers’ agent Rich Harvey of propertybuyer says the Election outcome, the APRA changes and the prospect of interest rate reductions have combined to greatly boost consumer sentiment.
“There’s been a spark in inquiry because people are now more confident about making buying and selling decisions,” Harvey says. “All those events in a short period of time have had a dramatic impact, which will translate into more activity and then, eventually, price rises.”
AMP Capital’s Shane Oliver says the Coalition’s first-home buyer deposit scheme policy, the end of threats to negative gearing and capital gains tax, APRA’s move to lower hurdles to getting first-home loans, and an indication that the official interest rate could be cut, contributed to a “quadruple whammy of positive developments”.
“There’s been an improvement in demand,” Oliver says. “While that’s consistent with a post-election bounce, there are also investors looking to come back into the market after the uncertainty around changes to negative gearing and capital gains tax have been removed.”
Oliver also believes the improvement is in part due to the property markets in Sydney and Melbourne getting “closer to the bottom”, and acknowledges sellers are also more confident and will be coming to the market.
CoreLogic’s Kevin Brohan says the Election result had increased confidence over credit availability for home buyers. “Residential property and taxation were election issues,” Brohan says
“A significant part of the market was faced with uncertainty, which meant that since the date the election was declared and policy discussion started up, we saw a drop-off in the auction numbers.
“We’ve seen quite a significant increase in clearance rates, particularly in the major markets in Sydney and Melbourne.”
“The reason for that is investors now have confirmed continuity of negative gearing and capital gains tax incentives. For people wanting to buy, the hurdle has been lowered a little.”
Property developers are preparing to revive projects that had been on the backburner after the Coalition’s Election win and moves from regulators to stimulate housing markets.
Queensland developer Consolidated Properties Group and partner the Liberman family’s CVS Lane Capital Partners are planning to “accelerate” two residential projects that already have development approval, according to Consolidated executive chairman Don O’Rorke.
Major listed rivals Stockland and Mirvac, speaking at a Property Council of Australia forum in Sydney, said inquiries had jumped at their projects but they were not counting on a return to boom conditions.
Stockland chief executive Mark Steinert says buyers suffered “psychological damage” from the downturn and Mirvac CEO Susan Lloyd-Hurzwitz warns against a return to “frothy” conditions, although investors are betting the two companies will benefit after driving up their value by about $2 billion this week.