Australia has had its first interest rate rise in more than a decade, just weeks out from the federal election.
While this and further rate rises may generate uncertainty for homeowners and prospective buyers, there are some property market matters Australians can be sure of as we head to the polls on 21 May.
The weeks leading up to an election often slow real estate activity, as the market awaits a potential change in government. However, neither major political party has flagged changes that should scare off prospective buyers or vendors.
Both the Coalition and Labor have steered away from reforms to capital gains tax and negative gearing, which were a centrepiece of Labor’s 2019 election campaign. Both parties are instead promoting how they will get more Australians into their own homes.
The Coalition will expand eligibility for the Home Guarantee scheme it introduced in 2020. The scheme enables 50,000 homebuyers a year to purchase a new or existing home with a deposit as low as 5%. The Commonwealth ‘guarantees’ the remaining portion up to 20%.
Regardless of which party is elected, the Home Guarantee scheme will continue. The maximum allowable purchase price will rise from 1 July, which will continue to encourage first homebuyers whatever the election outcome.
If the Labor party wins, it also intends to roll out a Help to Buy scheme.
This plan would help 10,000 low and middle-income homebuyers enter the market every year by giving the government a stake of up to 40% in the new or existing home. The Victorian government already operates a similar scheme.
Help to Buy can be utilised by previous homeowners, but only if they have no current stake in property. While this and the Coalition’s policies support continued growth in home prices, interest rate rises and a potential hung parliament are looming.
Fierce campaigns from teal independents in key seats are pushing for property tax reform, including Goldstein’s Zoe Daniel and Wentworth’s Allegra Spender in NSW.
Depending on how Australia votes, a small number of independents could have a big say if they hold the balance of power. If either Scott Morrison or Anthony Albanese can win in their own right, priority one will be stemming the tide of rising interest rates and cost of living – and keeping house prices strong is key to both their plans.