If labour get in , will Sydney have a mini boom ?

I'd like to think I'm a smart investor so I'm trying to work out how the herd will react and see if that does change my strategy .

The reality is that IMHO the majority of investors will factor tax changes into how they invest and that will alter the market , possibly for a number of years and that will impact my decisions . It the reaction ( of investors ) not the Action ( tax changes ) that concern me .

Cliff

 

People always make sweeping remarks like this, but is there actually any basis to it? Is there proof that a right leaning government is better for the economy than a left leaning one?
France, Germany and all Scandinavian countries have a government that's closer than it is to Labor than it is to the Liberals (let's ignore the Nationals). All of them have high taxes, socialism and all of them have good economies for European standards.
So personally, I haven't seen any evidence of the economics argument of left versus right.

 

Cabinet Papers 1986-87: Negative gearing almost axed

 

My perspective from being at the property coal-face almost every day, is that we are already starting to see the beginnings of an investor-led mini-boom in Sydney. If Labor gets in, then yes, I see it escalating until 1/7/17.
If Labor doesn't get in, then the Libs have already committed to no changes in neg gearing and coupled together with RBA IR cuts (with more likely to come) and banks beginning to loosen up the requirements for 20% deposits on IP purchases, back to only 10% again, the market is primed to go again.
Cliff, I'd be holding off until at least Feb 2017 for putting your unit up for sale, but that's not advice

 

The percentage who want to buy a house.

 

Refinement: The % of people who want to buy a first house...
Those who are already in the market arent so keen on a crash...

 

There aint gonna be no widespread crash fellas. Australia is too desirable a place to live in. So lets all get over the 60% nationwide crash fantasy.

 

Actually; as a home owner myself; assuming I don't want to sell, then a crash for me is a great thing because it allows me (all of us) to buy at the bottom of the market.

Sorta like the shares buyer who is "dollar cost averaging" - continuing to buy the same shares when they go down; so hence buying at the cheaper price - knowing they will go up and make them even more wealthy.

 

yes this is true.. cheaper prices means higher yields. I don't mind when share portfolio drops because it means I can buy more for less. Upgrading your home will be cheaper also, e.g. 500K to 1M after a 30% drop only needs 350K instead of 500K.
Its only the extreme borrowers at the limit of their serviceability that would suffer.

 

unless something like the GFC comes through , then they keep going down and ruin retirement plans …

Cliff

 

True - for the (self funded) retirees only invested in annuities and TD's and so forth....a lot of them down my way are screaming right now how tough it is.

For the folks like us who have IP's; the rents won't decrease, so if the debt on the IP is paid out it's all good.

 

People here always say that. But how many will be able to get finance when their current portfolio has dropped x% and banks have severely tightened lending due to the crash?

For the record I don't expect a crash.

 

Neither do I, Ed...probably a possible lengthy sideways market is my prediction.

As for the drop in equity; if you are implementing a strategy of paying down debt no matter what the economic climate; you will still be building equity...the wild card is the shifting DSR goalposts.

 

Quite the opposite actually...you will see more stock on the market. thus the prices will dive...everyone will head for the door..an excellent opportunity to buy.

With a select few investors most people are like sheep....

Personally...I am hoping labor gets in....my modelling shows that rents will go up 5-10%. Just that will add 40-50k to the bottom line...add to that another rate cut or two...I would seriously consider fixing rates for 5 years and quit my job!

The upside will be when labor realizes the catastrophic affect on the economy/household wealth. spend and changes the policy again to make it more attractive to invest in housing again...maybe not as got as a 50% CGT discount after 1 yr ...that should bring property prices back to normal.

Guess who I plan to vote for? There is money in dem votes....

 

Why would there be more stock on the market ? I think thats wrong .

My thoughts are people will be reluctant to sell property which is locked in for negative gearing , in particular in a market like manly where you won't find cash flow properties , but it is a highly desirable area with currently historically low stock levels .

Cliff

 

At least the upside of what will happen is,as most in this this site purchased early in this cycle ,and as a very high number of Australians own their ppor outright ,and no other property investment ,then those property investors still have time to sell and make money,this could also happen if fear comes in the market in property,if a massive investors selloff happens,no one ever went broke by taking the profit ..

 

Dont you remewmber what happened last time labour tried to axe negative gearing??

 

And locked into the current CGT arrangements.

 

+1

I have always wondered why some of the senior investors with over 20 properties in the portfolio don't sell some and pay off the others and just retire. It would always help to have a handful of paid off properties instead of a large leveraged portfolio. If retirement is the end goal why not just make it happen but then people may have other plans...

 

Very true

Which will also cause people who have them to be more reluctant to sell and give others another reason to bring forwards further purchases

We currently own more properties than we tend to hold long term so was always expecting to sell some of the ones we currently hold .

Cliff