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Will a change in Federal Government impact the property market?

In my 40 years in this industry I have had firsthand experience of the property markets with its ups and downs, correction booms, busts, the recession of the 1990’s, and its subsequent corrections.

Housing prices on the rise

Most informed projectionists agree that the Australian property market is affected by elections. So, if you accept that the upcoming election will clear the haze that has been present since the last Federal election, you will also acknowledge that a new mode of confidence will return after 7 September. And how will this affect our property market?

Well, I believe that it will not make one scrap of difference, irrespective of who wins the election; so let me explain why.

Both population growth and employment have the potential to impact positively on the housing industry and Australia’s permanent population increased by around 400,000 last year.

ABS figures show that by 2020 it is projected that Australia’s population is going to increase to 25.6 million people, which is an increase of 900,000 people every 3 years.

The Planning Minister Mathew Guy said Melbourne’s population is still growing at the rate of 1,500 people a week, which is equal to the combined growth of Brisbane, Adelaide, Gold Coast,

Newcastle and Canberra.

Population increases equate to a strong demand for housing, which in turn means higher levels of construction and employment opportunities in the building industry and for property owners and investors. This also means price and rental growth. Accordingly, this is the time to take advantage of the next capital growth phrase.

House prices have risen over the past year and vacancy rates remain tight at under 2% in most major regions.

Real Estate Institute of Victoria spokesman Robert Larocca said, “On the current trajectory, the market has recovered... we are pretty much there now... and if we see another quarter like we have just seen, Melbourne will be at a new peak very soon”. Year on year house prices in Australia’s capital cities have jumped by 5.4% – more than twice the rate of inflation.

The median price of a house in Melbourne rose slightly in the June quarter with a 2.4% increase in seasonally adjusted terms to $562,000 from a revised $549,000 in the March quarter and as of writing this newsletter we are just a couple of bids off the Melbourne medium price range breaking the $600,000 price record.

While stock levels are nominally higher than what is typical for the winter period, the higher volume is coupled with very strong and stable clearance rates, indicating that underlying demand is more than sufficient to absorb current stock.

In fact, current trends indicate that clearance rates will increase even further as spring unfolds, with WBP Property Adviser Phil Manning tipping clearances rates will reach 80%. This presents an opportunity for 1st home buyers and investors to get into the market at the start of the next capital growth cycle.

Maybe it’s time to take another look at your financial plan

Consider this a wake-up call. MBIC with its associated business partners offer a range of services for your consideration

• How to use your home equity as leverage and purchase an investment property without a cash deposit

• How to invest in property using your superannuation

• Finance structure

• Property portfolio’s MBIC is holding an information evening on Wednesday 30th October 2013 at 7pm. Should you have any questions, or would like to seek further assistance on property, or investment options, please feel free to contact me.

Phone: 03 9813 8188

Mobile: 0417 483 355 e-mail: carlo@mbic.com.au

Carlo Ruscitti