Does The Election Result Affect The Real Estate Market?
The recent Federal election had property ownership and affordable housing firmly on the agenda throughout the campaign, with constant speculation of interest rate rises something featured in the news on a daily basis.
During the federal election, the Labor party was said to be offering a scheme in which buyers can purchase a home more cheaply if they share equity in the property with the Government.
Labor says it would take up to 40% equity in a home to give Australians a better opportunity to get on the property ladder. Buyers could purchase the Government's equity at a later stage. When they sold, the Government would share any profit in line with its equity position.
The program comes on top of its promise to retain the Coalition's First Home Guarantee scheme, in which the Government guarantees 15% of a first-home buyer's deposit to avoid costly Lenders Mortgage Insurance.
We recommend you carefully study the incentives being offered by the major parties along with the stamp duty discounts and grants already available through state governments.
Both major parties are limiting the availability of their property pledges. Labor's equity-share initiative invites 10,000 applicants each year. The Coalition's First Home Guarantee scheme is available to 35,000 applicants.
So, it's important to consider your options relatively quickly before the various programs are fully-subscribed. Key points of the programs:
Labor's equity-share program
Open to 10,000 first-home buyers and existing owners looking to move.
Individuals and couples must earn less than $90,000 and $120,000 respectively.
The Government will take a 40% stake in newly-built homes and a 30% share in existing dwellings.
The program will be aligned with the First Home Guarantee scheme. If using this program, first-time buyers need only put down a 2% deposit instead of the standard 20% and the Government will make up the difference.
Coalition's First Home Guarantee
Provide 15% of a standard 20% deposit to enable first-time buyers to avoid Lenders' Mortgage Insurance. Single parents will need only a 2% deposit.
Increase the supply of new homes outside the cities by incentivising purchases with 10,000 region-specific, low-deposit guarantees for buyers who have a 5% deposit and wish to buy a newly-built home.
Spend an additional $2 billion to the $3.5 billion pledged in low-cost financing for social and affordable homes, supporting 27,500 dwellings.
Labor pledges to continue this scheme for the first six months and then implement its version. It can get a little confusing so we recommend talking to an expert on what may be available for your individual circumstances.
If you are looking to purchase, at Abode Peninsula, we have a number of properties available that would make perfect first homes. Please contact us if you'd like to see what's available.
Another issue that has had a strong impact is the fast-emerging shortage of rental properties, not only on the Mornington Peninsula but across the country.
Rental houses and units are needed quickly; and this could be a great opportunity if you're thinking of creating or expanding a property investment portfolio.
The latest data is compelling for any investor. A 4.7% increase in weekly rents in the 12 months to March 2022 is the strongest growth in almost eight years. With demand remaining high and low supply, it is a great time to be a property investor.
According to the REA Group's latest PropTrack rental report, we've experienced a 24% year-on-year fall in availability against a 37% increase in demand in Australia.
New listings are tracking 12.5% below the 10-year average, indicating insufficient stock. If your long-term wealth goals include a property portfolio, this could be a great time to jump into the market.
Below, we've listed six reasons why Mornington Peninsula property can be a great investment.
Stability
Compared with the stock market, the property sector is viewed to be less volatile. While there are good and bad economic cycles, history suggests the average detached home can double in value over an eight to 12-year period, depending on its location. In some areas of the Peninsula that period has been shorter!
Borrowing
Lenders can provide a mortgage to allow buyers to enter the property market, either as an owner-occupier or investor. It's not so easy to access similar funds to play the stock market.
Earnings
Rental income can help offset the costs of maintaining or paying down a mortgage on an investment property.
Tax benefits
You may obtain tax advantages, such as negative gearing, when you invest. However, you should consult a financial professional to ensure you capitalise on the benefits available.
Capital gain
You may achieve a capital gain on your original purchase when it's time to sell, although nothing in life is guaranteed. Again, talk to your adviser about what this would mean for you.
The myth
It's a common belief that all investors negatively gear their properties to make a loss and use that deficit to minimise personal tax. That scenario is not true for everyone. In the right circumstances, making a profit may be just as beneficial. Again, seek financial advice it is important to talk to an expert on the tax and financial implications of owning an investment property.
PLEASE NOTE: The information in this article is general in nature and provided as a general overview only. Always consult your financial advisor or accountant for advice specific to your personal circumstances.
