There’s no doubt that Property Investors were at the centre of much of the debate surrounding this election. But what does it actually mean? Now that we know that many of the uncertainties around property tax have been resolved, what does this mean for the future of property market and why?

We think that the market is in the fourth downward correction in the long-term upward trend of the last 18 years.

We see four recent changes that are starting to create a re-awakening of interest in the market.

  1. The announced first home buyer support from the federal government.
  2. The return of the Liberal federal government at this election which removed much of the uncertainty around property taxes.
  3. There is also the likely reduction of the 7% serviceability criteria for the banks from APRA and;
  4. The likely reduction of interest rates also foreshadowed by the RBA.

This past weekend, the country saw a huge jump in Auction clearance rates compared to the same weekend last year. Across Australia, clearance rates averaged at 66.4% compared to 52.4% in the previous year.

Although these changes have contributed to the sense of re-awakening in the market, it’s unlikely that there will be a full-throated boom anytime soon.

Bank lending is and will continue to be tighter than it was in 2016-17. The offshore demand mostly from China still appears to be remaining muted and the Australian economy is also facing significant headwinds.

For all of these reasons, we expect an improvement in market activity and prices to gradually flow through to the mechanics of the lending system and the market over the rest of this year into likely moderate gains in 2020.