Housing Market Update 11/05/2017
Well the Federal Budget has come and gone with quite a significant part of it dedicated to the hot topic of the moment, namely housing affordability.
The measures announced in relation to salary sacrificing into Superannuation for first home buyers at lower tax rates, retirees being encouraged to downsize with generous Super concessions and a further tax on foreign investors who keep their property vacant for long periods of time are all encouraging.
I do feel however that the major issues for young purchasers are overwhelmingly Stamp Duty and the extremely cheap finance still available. Yes I am saying that if the interest rates went up even as little as 0.5% (which I know wouldn't be "little" for some current home owners) the market would cool down immediately.
Throw in an appropriately indexed Stamp Duty system that reflects today's property prices and not those from its introduction in the mid 1980s and you would see clear improvements in both the availability of stock and the time it would take to trade.
I don't see the N.S.W. Government touching Stamp Duty any time soon so that just leaves rates. And as it stands today most pundits haven't factored a potential increase in until the end of this year at the very earliest.
I also worry about government intervention at an extreme time of any situation be it economic or otherwise. When legislation is passed at a time like that it will apply for ALL conditions and believe it or not the current Sydney market will eventually stop rising and become very stagnant for a prolonged period of time. I know, hard to imagine at the moment but I'm sure many retirees thought their super was fine and investors the same with their shares just prior to the Global Financial Crisis in September 2008.
I also vividly remember in 2004 watching tumbleweeds blow down the streets of Marrickville outside all the properties I had open for inspection on a Saturday where even two to three people attending was considered a success.
It can often be a case of careful what you wish for so time will tell if theses changes have a significant long term effect on property affordability.