WE NOW HAVE A NEW FEDERAL GOVERNMENT . WHAT DOES IT MEAN FOR PROPERTY ?
Nerida Conisbee Ray White Chief Economist
22
We now have a new Federal Government and with that comes change in leadership , policies and the way the country is run . The changing of the guard also comes at an interesting time for our economy and our property markets with significant change in both since the start of the year . With what we know so far about the new Labor Government ’ s policies , what does it mean for the property market ?
Complicated economic outlook and a slower moving
property market
We are currently in a complicated economic environment . Inflation is very high and a lot of the forces driving it up are out of our control . Off the back of this , interest rates are on the move with increases expected to continue for the rest of the year . More positively , we are seeing strong economic growth and low unemployment . Our international borders have reopened which means international migration is starting up again . The balance between keeping the economy in growth mode while ensuring inflation doesn ’ t get out of hand is a complicated one .
After the red hot price increases last year , house prices have calmed . We are still seeing growth in most places but that growth is more sustainable and an easier market for people to transact in . Affordability is unlikely to improve significantly this year however . While house price growth is calming , rents are on the rise and construction costs continue to accelerate . Rents and housing supply will need to be a focus of the new government .
Greater focus on sustainability
Sustainability is a major focus of the new government and some called the win a “ green slide ”. Climate change was a focus in the election and many of the first policies coming out relate to reducing emission targets , reviewing environmental legislation , establishing a national Environmental Protection Authority ( EPA ) and heightened disclosure for businesses .
There are potentially a lot of implications for property . Getting to new zero will require changes to the way power is generated and the way that households will use it .
Electric vehicle use is being encouraged which will increase demand for suitable power supplies , new builds could be required to have more solar , battery or water recycling features and owners of existing homes may be encouraged to retrofit to make them more sustainable .
First home buyers are a focus Home ownership is important in Australia as being a renter at retirement means you are more likely to be in an adverse financial situation It is therefore important that first home buyers remain a focus of the government . There is no easy solution to get first home buyers into the market , although we did see almost record levels of activity in 2021 off the back of a slower moving market and lots of government incentives . The Labor Government has plans to implement a shared equity scheme where the government would own a 30-40 per cent share of a home purchased by a middle or low income first home buyer . Although the scheme will inflate prices , it will allow people to get into the market who would otherwise find it difficult .