Real estate investors: Will the Labor government help or hinder you?

With Prime Minister Anthony Albanese’s second term, real estate investors are scrutinizing how Labour’s controversial housing policies can help or hinder its long-term plans.

Labor is implementing its policies in line with its policies that promote housing supply, support first buyers and incentivize buildings – all commitments help win elections and have direct and indirect consequences for real estate investors.

Housing Supply Plan

In view of the current housing crisis, Labour’s main focus is on its ambitious goal of building 1.2 million new homes by June 2029 under the National Housing Accord. This includes a $10 billion investment aimed at providing 100,000 homes to first-place buyers.

The lofty goals have been questioned, but were under scrutiny when the internal Treasury note was published in July, revealing that new housing goals are unlikely to be met.

The Albanese government is also expanding its first home guarantee program, which will eliminate mortgage insurance for tens of thousands of first-time home buyers and has pledged to invest $54 million in prefabricated housing for rapid construction.

With a $800 million help-buy program and its more generous real estate price and income cap, more family buyers will be able to get donations from government equity and get the property ladder earlier.

Main considerations

Angus Moore, executive manager of Economics Group, said housing chat consumed the radio waves around the federal election, but interest rates had a greater impact on real estate investors.

“Housing affordability has been at its worst for three decades with high mortgage rates. As interest rates start to drop and affordability increases, we are likely to see house prices rise.”

Australia needs increased housing supply, but real estate investors should pay attention; more homes can slow property value growth and may affect future capital gains.

In some market segments, more housing, especially in the affordable housing sector and high-density development, may put downward pressure on rental output as well as capital growth.

AUS real estate professional buyer Lloyd Edge said demand continues to outweigh supply in many parts of Australia’s housing, no matter which party is in parliament.

“Every time the election, the market slows down because people are not sure what will happen,” he said.

“What I found from an investor perspective is that now that Labour is back, one thing is clear – they can’t meet their housing goals. It’s a good thing for investors who are not buying enough homes. If you’re a non-first-time family buyer, or you’re a renter, or you’re a renter, that’s not a good thing.”

He added that investors should also be aware that past events are often good predictors of future events.

“I think interest rates may still fall, but if the government starts spending a lot and inflation returns, then interest rates may resume again,” he said. “This will suspend investors and how much they can borrow.”

Despite two cash rates lowering two cash rates in the first half of the year, the Reserve Bank of Australia has not provided more relief after its July board meeting, although the market’s chances of price at 97% were reduced by another 0.25%.

If, as expected, if the Albanian government overspending, Mr Edge warned that the housing market could be suspended for a while.

“It’s a bit of a double-edged sword for investors,” he added.

Investment tax exemption as landlord

Before most federal elections, the hot topic of negative gears was usually a party in the spotlight to win the favor of certain queues.

This time, the controversial tax relief is not high on political radar Except for the Australian Green Party.

Although Labor has not announced any specific changes to the negative gear, the Treasury has not ruled out the option of exploring modifications to certain tax benefits.

Mr Ed said that while the head is still in the case where investors come to help reduce tax liability, it is not a high priority for many investor clients.

“It’s a reward, but it’s not a driver for investment,” he said. “Many of my clients come to me and they’re not even interested in the negative gear because it doesn’t even make sense.

They would rather buy the closest to neutrality, or even aggressive gear, than spending change every month, just to get a little tax by the end of the year. ”

Labor’s rental plan provides tax relief for investors and is expected to provide about 80,000 new rental units over the next decade. This is a policy designed to encourage investment in long-term rental properties, not short-term rentals.

According to Mr Edge, the motivation for investing in a new property is what investors should enter after completing their assignments.

“It’s not my best strategy as an investor and a buyer agent when it comes to buying things from a plan or on a home and land packaging,” he explained.

“These types of properties are often not in highly sought after areas, especially homes and land packages, where there is a lot of land, which means there may not be a lot of capital growth because there is too much competition.”

Another risk investors consider when buying units from a plan is that it will be one of many very similar properties.

While real estate investors may be affected by government interests by incentivizing new purchases, Mr Ed said it is worth it to be distracted.

“As an investor, you have to consider your own long-term capital growth.”

This article first appears on mortgage selection and is republished with permission.