May 31, 2019 by Adele Fairchild
Well I personally thought the outcome would be much closer than many people were expecting but I certainly didn’t see that coming! From a property perspective what are the likely key impacts of the Coalition being returned in Canberra?
Investment Properties
Clearly no changes will occur to existing negative gearing arrangements and capital gains treatment on investment properties, so there won’t be any artificial impact on market prices from government changes / interference in this area. Investors will like the stability this brings to their property investment decisions.
Impact on Brokers and Lenders outside of the Big 4
In respect to the Royal Commission Recommendations, the Coalition has committed to no changes to Brokers existing payment structures, which is not only good news for Brokers but also very good news for smaller banks, building societies and other small lenders servicing the community. Two further recommendations relating to a Best Interest Duty (to the consumer) and educational standards for brokers continue to be worked on and are welcomed by the industry.
First Home Buyers
Both of the major parties committed to providing relief to First Home Buyers by underwriting the cost of Loan Mortgage Insurance (LMI) that would normally be built into a loan for borrowing in excess of 80% of the value of the property to be purchased. What this means for borrowers trying to enter the market is that they will need to save approximately 2-3% of the value of the property less than they did previously to qualify for a loan.
There is no watering down of other lending criteria at all, this just saves First Home Buyers a significant amount of money and enables them to bring forward their property purchase. I see this as having a relatively short term impact on the markets as it more a case of bringing forward demand rather than necessarily expanding the base. How and when this proposal is to be implemented is yet to be seen but clearly First Home Buyers will be watching developments closely, as will we!
Colin
