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The regulatory changes and new initiatives proposed over recent weeks have stimulated confidence within the property market, regardless of the lack of certainty around implementation timelines or actual impact on lending.
“Although neither is in effect yet, I think the conversation around market conditions has changed to bring out a little more confidence,” he explained.
“The two things together are important because if there was an interest rate cut, you would still have to get over the current 7.25% [interest rate floor]. But now, if that’s reduced to a 2.5% buffer, then more people could actually benefit from a cut.”
Brogan continued, “So, that’s the theory of confidence returning to the market. Then, when we look at the auction results that came in over the weekend, we can actually see there is evidence that there’s been a bit of a bounce back in confidence.”
Sydney, for example, exhibited the highest preliminary clearance rate evidenced this year at 69.9% across its 697 auctions.
Brogan continued, “What has happened with the election is you’ve now got a degree of continuity from a taxation policy point of view – relating to negative gearing and capital gains tax concessions for investors – that will manifest in a little more activity from investors.”
That said, Brogan highlighted the benefit of one promised change – the government’s first home buyer scheme.
“That’s a little way down the track but, again, I think the fact that people are talking about it is actually helping to bring back confidence,” he reiterated.
Looking ahead, the positive trajectory may be stunted once again given that market activity naturally slows in the winter months. Additionally, the first post-election auction clearance results from this past week may not provide the most comprehensive view.
“It’s interesting because anybody who had their property up for auction last week put it up for auction three weeks before the election, so the volume of properties for sale was predetermined before the result of the election was known,” Brogan explained.
“It will be interesting to see if the election results actually provide stimulus for people to bring their properties onto the market, as well as stimulus for people to buy them,” he concluded.
