Is the market picking up with an election looming?

I just noticed in my territory that a nice affordable family home (around $430K) house listed last week had 15 groups through the first Open last Saturday, three offers and it is already under contract. Do you think this might be related to an impending Labor win/Negative Gearing situation at the next election?

Or just Business as usual after Christmas? About 25 km from CBD

 

Or it's the calm before the storm.

 

Might be just a coincidence @Angel. I have the feeling that if (when?) labor wins there should be a mini boom, Brisbane and Adelaide in particular. But at this stage it’s to early to tell.

One doesn’t make a trend. I’m watching a few places just for kicks. They are still up for grabs.

 

First, labor has to win.
Second, it has to pass leglislation through the house of reps.
Third, it has to pass through the senate. Historically, with the mish mash of independents and minor parties in the senate this won’t be easy.
Marg

 

That is true. A lot of ifs. Will be interesting to watch. Times like that can spell great opportunities.

 

Hopefully that will be the point at which valuers and lenders are super conservative.

In the UK c.1989 a tax change was brought in (but not immediately) that stopped (IIRC, memory fuzzy) unmarried coupled being able to claim 2 x the PPOR interest allowance, reducing it to 1 x as for married couples. Result, huge numbers of people piled into the market to get their deals through before the due date, followed by a collapse in prices and years of misery with lots of people losing their homes to a combination of high interest rates and negative equity. Quick check of Nationwide data shows outer London prices peaking in Q2 1989, then dropping 30% by 1993 and recovering to 1989 levels in Q2 1998 (nine years). House Prices Data Download | Nationwide

 

Labour win looked like it was a foregone conclusion but they have played into libs hands and we could have another election where boat arrivals is a major factor.

Also the recent hack on government computer systems could go either way, wouldn’t want to be talking policy one day for a leak showing intention to do the opposite to be leaked the next day. Will be interesting to see how much information has been extracted and how it will be used.

 

I can tell you that I have had a number of inquiries from people wanting to get in before negative gearing is taken away. I think there is a general sense from investors that it is reasonable to wade back in the water at these levels as well.

 

Probably still 3 months away for an election, so its all smoke and mirrors at the moment.
Nothing like trying to scare people for something that hasnt even happened yet.
Reminds me of Donald Trumps attempts to stop the "invasion from Mexico" with the wall.
Yet at the same time its own citizens are running aroung and going on killing sprees..

 

First rule of investment, always prefer an investment that has positive cash flows over negative....

Why should I go in now when I know that there is a high chance that market will go down further? I simply do not understand that concept that u buy a negative cash flow property just so that u can claim tax deductions ....

Just blows my mind

 

Not in my Investment Rule book.

If that rule was in my book, I would rip that page out, maybe even toss the book in the bin.

I look at Total Returns for an individual investment (especially after tax and a preference for high growth) and Net Cashflow across my property, shares and cash portfolios.

Just blows my mind that one would make investing decisions on an individual investment based on cashflow.

Correct me if I am wrong but my understanding of your post is that one shouldn’t buy say REA shares with a loan of say 6% to 7% when the dividends are 5%.

I think that is crazy. One would miss out on capital growth of 28% pa.

I bought REA shares 8 years ago (in 2010) and the above numbers are what that investment has delivered.

 

Could be just business as usual,the only item I have seen is more properties for rent and about the same in for sale..The only one's that seem to not be selling are the one that split the block ,build one side then wait to sell the first one to fund the second build,but most of them may not have to sell anyway and can wait as debt may not be a problem..

Value for money Brisbane and the area's from the North coast to The Gold Coast compared Australia wide
just on the entry price is still value,just depends on how one see's value..

If you were to compare the DOW which is a few percent of last year high a few minutes ago --to property prices
in some small pockets within Brisbane then just on the ucv rateable value some are above 12 percent if you level the price out for 20 years ..

Full steam ahead..imho..

 

We need to remember that November - January are typically very quiet periods where no new stock gets listed.
Now compound this with falling house prices, Credit Crunch finding the new capacity for borrowers and a Royal Commission.

Most of these have now run their race and I would be expecting to see A LOT more activity.
I do not believe many investors would be purchasing for election and the tiny numbers that are at this stage would have pretty much no impact on the overall market.

 

How has this rule worked for you ? And how much wealth has it created? As I don't understand how reducing leverage, how having cash tied up just to make a property cashflow positive and the resulant opportunity cost, could be better. Could you tell me who buys a property just to claim tax deductions ? and why you even care if some-one is that silly. I broke this rule yesterday, I bought ELO shares that don't have positive cash flow but do have reserves of cash, one reason I bought so I could hold if necessary, but as they jumped 15% this morning I sold. What is going to happen now I broke this rule ??? I

 

It is very simple to understand, people do not buy cashflow negative properties to claim tax. they buy because the capital gain is way way more likely to be achieved by buying these properties.
Cashflow positive properties are either in low socio-economy suburbs or some apartments and student accommodations, but how much will you gain by selling those positive cash flow properties. what you gain will extra 200$ in your pocket at the end of the month,
If you are that needy, investment game is not yours.
Example: my Brother purchased a 3 bedroom house in Blackburn north for 330K in 2006 and sold it in 2017 for 1.2M almost 900K gain, find a positive cash flow property to give you this result.
Another friend of mine bought a positive cash flow property in Corio in 2008 for 190K and now it worth maybe 330-350K. of course, he pocketed 2-3k per year from the Corio property.

 

I bet your brother's property is cash flow positive now as well.

 

I find it strange people buy to get negative gear before labor get in
why do you want to buy with head wind heading your way?
you better off sell if you think labor get in

if -ve gear is abolished that a catalyst for less demand on existing properties, it not dead but that is a headwind

you usually get in before a tail wind arrive not a head wind

The case of buying before GST make sense as that a tail wind that drive new properties up 10% and exisiting properties median price get drag up as well

 

PandS, I think you are right. NG is not a reason to buy property.

You should buy property in Sydney not for tax reasons, but because Australia's economic engine and premier city is on sale right now. No regrets people.

 

Cash investments such as bank accounts, term deposits, etc are positive cash flow investments but I wouldn’t suggest them for most wealth creation people.

 

Just because it's comes of its high doesn't make it a good investment.
In an environment of potential NG and CGT changes, with yields still too low, P2I still too high, too much supply for next two three years, rents falling, is it a good investment?