Property Report - Issue 99

PROPERTY REPORT -Issue 99

Election Promises Lead to Property Market Safe Haven

The real estate market is seeing a complex mix of challenges and opportunities as economic and political factors shape housing trends leading up to the federal election.

The recent interest rate cut driven by easing inflation and global trade uncertainties has led to lower borrowing costs and boosted buyer sentiment. But auction clearance rates remain subdued, with Sydney at 65.5% and Melbourne at 67%, reflecting caution amid economic uncertainty.

However, pre-election jitters are starting to point toward property becoming the safe haven amid stock market vulnerability given the uncertainties in world trade.

As we edge closer to the 3^rd May election, both major political parties have introduced demand-side housing policies ahead of the federal election.

Labor’s expanded first-home guarantee scheme, allowing buyers to enter the market with a 5% deposit with uncapped income and number of entries, and the Coalition’s tax-deductible mortgage interest plan for the first $650,000 of a mortgage, aim to assist first-home buyers.

While these initiatives improve accessibility, economists warn they may push up property prices without addressing the root causes of affordability issues i.e. supply shortages, planning delays, and rising construction costs. An example of this has been bulk builders charging boutique prices in an attempt to increase profits.

The housing shortage remains critical, driven by population growth and constrained construction activity.

Labor shortages and rising material costs continue to impact supply, leaving developers struggling to meet demand. Labor’s pledge to build 100,000 homes over 8 years is a step forward, but experts stress that skilled migration and strategic planning reforms are crucial to boosting construction productivity.

Amid global economic turmoil and trade wars, Australian real estate remains a resilient investment. The weaker Australian dollar has made local property more attractive to foreign buyers, while lower interest rates are expected to support market momentum.

Investors are also eyeing opportunities in industrial real estate and listed property trusts, which have shown resilience despite market volatility.

While real wages have seen slight increases recently, stagnant productivity growth and rising labour costs could lead to inflationary pressures. Sustainable wage growth is vital for long-term economic stability and affordability in the housing market. Businesses continue to call for reforms to improve economic competitiveness and address industrial relations challenges.

For buyers, falling interest rates present an opportunity to secure lower mortgage repayments, but cautious budgeting is essential amid uncertain economic conditions.

Sellers may benefit from sustained demand, particularly for high-quality homes or affordable entry level homes, as the market stabilizes. Investors should explore diverse opportunities in residential and industrial properties, balancing risks and rewards.

As the federal election approaches, housing remains a central issue. Navigating these dynamics will require informed decisions and a focus on long-term value. Whether you’re buying, selling, or investing, the local property market continues to offer potential in an evolving landscape.