Analysis of Property based on who Wins the Election

Hi All,

I have been my analysis on what impact on who wins the election:

If the Libs win, I see the following:

1. More money will move from Super to Property/Shares as punters will see that more govt. interference in Super
2. Sydney and Inner Melbourne prices will continue to head-up driven by OO with lower interest rates and they feeling that now is the time to get in. Brisbane, Adelaide, Outer Melbourne markets will strengthen significantly as people park money from Super into cheaper markets
3. Rents will stabilise or flat line as more Investors are in the market
4. There will be mini boom but the downside will be felt dramatically in Sydney and Melbourne (inner) when the RBA realises that inflation is the issue and not deflation. The attempts to cool a heated market could bring a massive correction in Sydney and Inner Melbourne as the market way shoots

If labor wins, I see the following:

1. People will stop investing in property. Demand will be skewed toward newer places.
2. Adelaide and Brisbane and any other place where you can get neutrally geared or positive properties. Another rate rise will cement this opportunity.
3 If labor does not change the liberal structure around super...then property will plod along.
4. Rents across Australia will grew well above inflation. At some point there will be an affordability crisis for rents. Labor will probably have to review their policies.
The real downside is that could affect the economy and cause a crash in the Sydney and Melbourne Inner markets. Even though Neg gearing will be grand fathered...people will jump like lemmings.

 

Pretty obvious who'll win.

I doubt it'll affect plans either way though.

 

I think it will be the Libs...its starting to go quiet on the property front...so mad men like me might rush in. The watch what happens post election...as money shifts from super.....

If this plays out....it should get very interesting.......

 

Pretty obvious who you (and i) want to win... The polls this morning show 50:50

 

Either way, there will be opportunity for savvy homebuyers ( whether investing in IPs or PPORs ).

 

Yes...absolutely agree with that statement.

I am more worried about managing the risks eventuating....down cycle...

 

Can you explain this? Most super is already invested into shares and/or property. Will people stop making additional contributions and hold these directly?

What are you stating about these markets? It isn't clear (to me at least) from your post.

How will they attempt to cool the market? Further APRA measures, interest rates?

Some interesting points, be steady as she goes for myself whoever wins.

 

More about what will be in people's heads....the libs have started the process of starting to tax or cap super for high income earners, namely:

1. Once you have more than $1.6m in a pension fund...any pension drawdowns are taxed at 15%
2. Super contributions now capped at 25k ...it was 30k for under 50 and 35k over 50 years of age
3. People who earn over 250k will now pay 30% contributions tax.

So that will leave some people looking for alternatives to parking money...so it will likely go to shares or property in my view and yes it will be something they can directly control or via a structure like trusts or companies.

My view is that Adelaide and Brisbane are well priced...so they have much more room to move. If the Libs win and Sydney and Inner Melb move up further ..and if it goes crazy with more rate cuts....that would push their growth way out of kilter....the people who jumped in the end are definitely going to get burnt if they over leveraged or do not have an exit plan. I do not think APRA will be able to do much..and it would be too late anyway...but the RBA can and it would use rapid interest rate rises.

As I said it might be containing deflation now....but what if inflation rears its ugly head again??

 

I do not know what will happen, or how people with this sort of super will act, but it would seem small minded to go for cheaper properties in cheaper markets ?

Also, lot of people do not want to bugger around with being a landlord, investing in the share market makes sense.

I think the main game change will be how property is treated, the Labour plan would have been ok at the beginning of Sydney cycle, at this end, I think it is very risky, I do hope libs get in so this is not played with at this point in time.

I do not care if they limit NG later if people do pour more money into the housing market, but you do not want to kill off one of the things that assist the economy at this time.

 

The reason why people will go to cheaper markets is because there is still demand in place like Brisbane, Adelaide, and outer Melbourne. Sydney and Inner Melbourne are out of reach for most people...and the returns are very poor 2.5-3.5%

As for the share market....people are scared of the ups and downs. I doubt they will jump in yet.

Agree with you if Labor gets in and kills the market...it will affect the market.

The real elephant in the room is Sydney in either case if it is going to hurt a lot of people...either it will keep going up and then come off in a big way (if Libs get in) or rents will push up quickly (if Labor gets in). Sydney is traditionally a boom bust market....the question of the degree of boom and bust.

 

Yeah, I just do not think that all these other people are going to think like you/us, that's all.

I see a lot of smart people do dumb things in the short term, it is a big step for people to invest away from what they know IMO. Happy to be shown wrong over time though.

 

That is the issue...a see this all the time..I have seem make 700k plus for over 20 years retire on 60k plus some consultancy work ti supplement their incomes. Go figure....

People get too emotional....they either hand over their life to Financial Advisors with poor records or invest but do it with no risk ie project marketeers offering rental guarantees.

Good thing...otherwise there would not be enough money to go around.

 

Politicians make a lot of promises but all sides have the same 'do nothing' type of plan when in the role, so don't see much changing whatever happens. Investors are 'greedy', people with several properties are 'rich' and 'minorities' get more taxes to keep the masses happy

 

Immigration and population growth is still priority (consumption and taxes) whichever side comes in.
Also there is also one card to play that both sides can play
and Labor chose to play that card in 2009 when they relaxed FIRB / foreign investment rules during the worldwide GFC. This fueled property prices to a frenzy/boom particularly in Melbourne I remember at that time. It was like what GFC? Property prices were booming.

 

Have you ever been asked to vote in the "polls"?

 

Don't get this

 

My bad, was terribly written on my phone.
What I was getting at, is have you ever been asked to vote by the companies who are doing the surveys? this whole "50/50" result that your quoting was from a survey where only 2450 residents were apparently questioned.

TLDR polls mean ****