A Property Buyer's Guide To The Federal Election Result
By Jamie Martin
Sales Manager QLD
Any Federal Election is a landmark moment in our nation’s history but there was a sense that the recent Federal election was particularly crucial for the future of the property industry and, more importantly, the hopes and dreams of potential home buyers.
The past year or so has posed many challenges for the sector, from a banking royal commission to unnecessary regulatory interference and the uncertainty that comes with a looming election. Such issues have caused many people to tread carefully when it comes to buying property.
I believe Scott Morrison and the Coalition’s shock win in the Federal Election is the circuit-breaker needed to restore confidence to consumers and spark a surge of interest in property developments that tick all the boxes when it comes to great location, quality product and value for money.
Here is my take on what has changed since the Morrison Government was returned to power and why it is suddenly a lot more attractive to invest or make a home in a community such as Providence.
Change to lending: This week’s move by the bank regulator, the Australian Prudential Regulation Authority (APRA), to decrease the assessment rate for someone’s capacity to afford a home loan is a game-changer. Presently all lenders are required to assess affordability for a home loan using a ‘buffer’ or ‘qualifying rate’ of 7.25 per cent.
APRA announced it is proposing to decrease the rate to 7 per cent, which will improve a client’s borrowing capacity and ensure many people quite capable of meeting their obligations are no longer unsuccessful in their applications.
Interest rates: The Governor of the Reserve Bank of Australia has indicated an interest rate cut for June, along with a further fall later in the year. This sort of speculation is uncommon prior to the RBA’s monthly meetings but, should it unfold, would certainly provide much-needed encouragement for borrowing.
First Home Buyer Scheme: The Morrison government First Home Loan Deposit Scheme will allow for a 5 per cent deposit, the Government will guarantee the remaining three-quarters of a standard 20 per cent deposit. This will ensure they no longer need to pay lenders mortgage insurance, effectively reducing the cost of getting into a first home by up to $20,000. While specific details of the scheme still need to be released, it will undoubtedly bring more first home buyers into the market and speed up their purchasing window.
All this combined, we are starting to see a slight lift in consumer confidence again. The decision to purchase a home or investment property will always be a big call for those involved but there is no doubt that decision has been made a little less stressful after the events of the past week.