While the calling of an election can often send the property market into a holding pattern, this time experts believe it may be spurring some buyers into action.
The reason? The possible end of negative gearing as we know it. If elected, Labor plans to abolish the current legislation which offers significant tax breaks to investors. Under Labor’s proposal, only buyers of new properties will be able to gain the tax benefits of negative gearing.
While Labor may not win the July 2 election and if they do, the policy will not take effect until July 1 next year, it appears the mere possibility is encouraging investors back into the market. Experts believe it’s partially responsible for the 30 per cent spike in investor numbers over March. And according to a report in the Sydney Morning Herald, analysts also think it is part of the reason why the auction clearance rate hit a high of over 80% in mid May.
New Relaxed Rules on Investor Loans
After last year’s crackdown saw many investors flee the property market, Westpac Bank is lowering the size of deposits it requires from property investors in a bid to lure them back.
Westpac, which is Australia’s biggest lender to landlords and St George Bank which it owns, have told mortgage brokers the maximum loan-to-valuation ratio (LVR) for new mortgages for property investors would rise to 90%, up from 80%. This means property investors need a deposit of 10% of a property’s value compared with 20% previously.
This brings Westpac into line with rivals, but it also suggests banks are relaxing some lending conditions that were introduced last year when the industry slammed the brakes on investor lending. Banks are also offering more competitive interest rates to investors, such as St George’s new cut-price variable investor loan of 4.24%, according to the Sydney Morning Herald report.
For guidance on the best finance opportunities please call Gary Phillips from Loan Market on 0413 100 302.
Local Market Strong and Steady
A continued lack of stock and the recent drop in interest rates to historic new lows has proved a winning formula for sellers in our area.
While stock levels have risen slightly since the beginning of the year, there is still a definite lack of quality stock for the high number of buyers seeking to purchase in the inner Eastern suburbs.
If you are thinking of selling, now is the ideal time to contact one of our highly experienced sales team on 9331 9600. Find out how we can help you achieve an outstanding price for your prized asset.