Same Government Different Market

Many property owners on the Northern Beaches of Sydney are still scratching their heads with the surprise election result of a fortnight ago. The irony of finding ourselves with the same government but yet a different market is giving those looking to buy and sell real reasons to celebrate. The loosening of lenders serviceability criteria, potential interest rate cuts, no changes to capital gains tax or negative gearing or just a confidence boost from an economically focussed government, it’s all these factors that are the makeup of today’s market.


Love them or hate them, The Australia Prudential Regulation Authority (APRA) have been one of the single largest influences over the Australian property market since introducing sweeping reforms over the past three years. Having achieved the intended fortification of the property and lending sector, APRA have now recognised the need to stay dynamic with the market and amend their serviceability regulations to ensure ongoing performance and capital growth in property prices. The proposed new changes include the reduction of the assessable interest rate for serviceability to be 2.5 per cent over the actual loan rate. This could effectively increase the amount a borrow could borrow. A boon for those looking to sell and buy.


The Reserve Bank of Australia (RBA) has also been busy signalling to the market a potential interest rate cut come the June 4th meeting. The RBA has shown great restraint in lowering interest rates despite the dampening property markets in Melbourne and some parts of Sydney. Again showing a willingness to work with the market, the RBA have indicated a rate drop could be seriously on the cards next month. An acknowledgement of a softening economy and higher cost of living. A cut from the historical low cash rate of 1.5 per cent would most likely only be of .25 basis points although enough to spur on consumer spending.


No matter whether you were a property investor, owner occupier, developer, agent or finance broker, we all sighed a breath of relief on Sunday morning with there being no changes to negative gearing or capital gains tax on the policy agenda. Or at least in the foreseeable future.


However, it wasn’t just property owners that had a win. Buyers have also got means to rejoice particularly first home buyers (FHB). The Government has promised (yet to be legislated) a 15 per cent guarantee for those FHB’s who have saved 5 per cent for up 10,000 FHB’s earning under $125,000 for singles or for couples earning less than $200,000. This effectively gives FHB’s the opportunity to secure an 80 per cent loan with a lender and avoid costly Lenders Mortgage Insurance. This potentially opens up the market to property ownership to thousands of young first home buyers who prior to the announcement had all but given up on the great Australian dream of owning a home.


In light of all of this, Upstate has been experiencing a different market of its’ own. Despite many in property claiming the last six to twelve months being poor in performance, here at Upstate we’ve seen the exact opposite. Despite the slowdown in Melbourne and much of Sydney, the Northern Beaches has continued to outperform the market. New records in property prices are still being set and sales volumes that we’re seeing through our office are as strong as ever. Has it got tougher to sell and harder to buy, no doubt. Is there still excellent prices being achieved, absolutely. It’s changing markets like this however that place the emphasis again back on engaging the right people at the right time to act on your behalf no matter whether you’re buying or selling. It’s not a market to play games but to be strategic, seek advice and choose the right agent.


Property owners, buyers and landlords are yet to see the full effects of the influences listed above however there’s plenty to look forward to over the coming months. At Upstate, as are many, we’re feeling confident yet realistic. We see the market as one that Sellers’s should not miss and buyers should not to miss out on. Each property is a case by case scenario and if you need tailored strategic property advice no matter which side of the table you sit on, don’t hesitate to speak to one of our experienced team members today.


We look forward to chatting with you soon.

Signing off (and always here to help),
Your local Upstate team

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