FEDERAL ELECTION A NON-EVENT AS MARKET FOG CLEARS

Housing market activity has eased over the past year as restrictive home lending policies have acted to push down prices and severely impact buyer and seller confidence generally.

The past year’s fog of uncertainty however has now started to clear with signs emerging of a lift in home buying.  Melbourne’s weekend auction clearance rates have trended upwards over autumn and are now tracking similar to those levels recorded over the same time last year.

Seller numbers however predictably remain relatively subdued but confidence from prospective vendors is set to be restored gradually on the back of recently rising clearance rates with a spring revival now clearly in prospect.

Fragile housing market confidence was however set to be tested by the distractions of the federal election campaign now under way, reflecting concerns over the likely policy impacts of the major parties as announced.

These concerns however have largely proven to be a non-event with the policy positions of the Labor Party and the Coalition government as usual differing only at the margins.

A restored budget surplus has enabled both parties to provide modest income tax cuts and various direct spending initiatives, which are unlikely to have any significant impact on the current macroeconomic environment.

The Australian economy continues to experience the conundrum of low inflation and subdued wages growth despite record low interest rates and strong labour markets. Although the Labor Party has proposed direct action to raise low wages this will unlikely be generalised and clearly presents productivity issues.

The key demand drivers of housing markets are interest rates and migration and continued commitment from both parties to fiscal conservatism and budget surpluses will ensure down pressure on interest rates notwithstanding the impact of other factors.

Both parties have also predictably announced reductions to recent record levels of migration but each clearly recognise that continued robust migration is a mandatory requisite for Australia’s economic growth.

New Labour policies that directly target housing markets by reducing some property tax concessions are unlikely to have a significant overall effect on current market dynamics.

On the important supply-side of housing markets, federal government policies have little impact with state and local government planning protocols the key drivers of new housing.       

Housing markets are now generally and predictably getting on with the business of home buying and selling as the recent cloud of uncertainty gradually lifts with the growing recognition that “there is nothing to fear but fear itself”– regardless of political and media blather.

 

Words by Dr Andrew Wilson


Dr Andrew Wilson is Chief Economist for My Housing Market. A high profile property market commentator, he provides comprehensive property market intelligence to industry, investor groups and the wider community.

 

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