I’ll forewarn you now – I’m a little cynical in today’s blog!

With a Federal Election only days away, both major parties seem to be handing out money faster than Santa Claus manages to distribute his presents throughout the world.

I’m not writing this to be political but when there’s several key Policy changes that affect property owners, I have been following this election closer than I ever have in the past (perhaps I’m just getting older and a little more boring these days!)

I’m not going to banter on about proposed changes to Negative Gearing concessions as I’ve discussed this previously and everyone is probably tired of hearing about it now.

What I did find interesting is the Coalition’s sudden announcement of their incentives for First Home buyers…should they be elected.

Given the announcement was made within several days of the election, one could be forgiven for thinking that this is nothing more than a reactionary grab for votes at the proverbial eleventh hour.

What was equally as surprising is that before virtually anyone had heard about it, the opposition vowed to match it!

You’d have to ask how much thought had gone into that decision from each side of the table.

Given it is one of the very few pledges that both major parties are supporting, it would appear that this will pass through the Senate and take effect.

So, let’s break down the Policy as it is a little confusing for many I’ve spoken to…

I’ve had a detailed look at the Policy on the Liberal’s website and it is certainly a little light on detail.

From what we can ascertain, a buyer who fits the criteria (based upon thresholds for personal and household income) will be able to save 5% and have the remaining 15% of the deposit ‘loaned’ so that they can eliminate the requirement for Lenders’ Mortgage Insurance…and could save (according to the Liberal party website) “around $10,000”.

Feel free to read the policy on this link below…

https://www.liberal.org.au/latest-news/2019/05/12/helping-australians-buy-their-first-home

What is the limitation of the purchase price? “The value of homes that can be purchased under the Scheme will be determined on a regional basis, reflecting the different property markets across Australia.” – according to their website.

Pretty vague? It wreaks of pushing out a policy quickly and making it up as they go…and again, despite limited detail, Labour will match it…whatever the detail happens to be!

What has been announced is that it is limited to 10,000 loans per year…and last year 110,000 First Home buyers entered the market so based on these numbers, you’ll have less than 10% chance of getting one unless you’re ready to act quickly.

From what we can tell, many people have misunderstood the detail, and don’t realize that this is a loan that still must be paid back – it’s not a cash giveaway like previous incentives for First Home buyers.

When you break it down, the Federal Government effectively becomes an entity that is similar to a Mortgage Insurer themselves under this scheme.

But is it the land of ‘milk and honey’ meaning it will be easier to obtain a loan?

The short answer is ‘No’.

With the dust still settling on the recent ‘Royal Banking Commission’ and changes in banking policy to lending, buyers being ‘loaned’ another 15% from the Government will not (in the banks’ eyes) mean that their serviceability, savings history and spending habits are any different from what they were before.

Critics of this announcement have already cited many potential pitfalls to this scheme.

Firstly, is it a good idea to borrow 95% of the value of a property in a declining market? If the market falls more than 5% further, many of these borrowers could face a situation of ‘negative equity’ – in other words, they’ll owe more on their property than what it is worth.

Another theory is that it will cause property prices to increase again although in my opinion, the fact that there will only be 10,000 loans approved per year won’t be a deep enough cut to inflict much damage on median property prices.

Feel free to read today’s ‘Insights’ article for a comment from a few leading economists about this scheme.

In short, it appears to be a desperate bid by both sides to win voters at the last minute with little thought on how it could affect First Home Buyers or the industry.

What effect will it have on the result on Saturday? This remains to be seen.

If you believe the leading book-makers in Australia, Labour have an almost unbeatable lead and some leading journalists have already called the result over the past few days.

What’s interesting to me is that from talking to many people, the sentiment out there seems to be a little different.

I’m well aware that I’m tucked in a little pocket of South-East Queensland and the people around me will formulate a very, very small percentage of those that vote and will have influence on the outcome.

In saying this, there’s some interesting signs out there.

There are Social Media chat groups of real estate agents around the country (one of these private groups have more than 10,000 members from all around Australia) and a few days ago, the moderator of the group ran a pole asking who the members will vote for this Saturday.

Surprisingly, 88% of them stated that they will vote for the Coalition with only 6% claiming they’d be voting Labour. (Staunch Labour supporters will probably comment that this proves the theory that real estate agents are all complete morons).

My gut feeling is that this election may be a lot closer than what many of the news polls are suggesting but we’ll find out on Saturday night if this is to be true.

Like I do, many of you reading this will live in Dickson, (according to the journalists, this is “one of the key ‘battle-ground’ seats” – mind you, half of the seats in the country have been described as ‘key battle-ground seats’ over the past few weeks) and I’m sure (like me) you can’t remember more political activity on the side of the road on seemingly every main road and intersection.

Whatever the result on Saturday, we’re hoping that the result is definitive, and we don’t have the prospect of a ‘hung parliament’ hanging over our heads like we did in 2010.

We’ve noticed in years gone by that many people tend to sit on their hands and do little leading into a Federal election but as soon as the result has been determined (no matter who wins), people seem to have some certainly about the future and tend to recommence making decisions.

Surprisingly, our past week has been very busy and we’re a lot busier now with listing appointments, inspections, offers and contracts than what we usually are leading into any election, so this is a good sign as we head towards Winter.

In any event, Happy Voting on Saturday (if there is such a thing), and as always, Happy Listing & Happy Selling!

 

 

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I’ll forewarn you now – I’m a little cynical in today’s blog!