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Laing+Simmons managing director Leanne Pilkington said that the first half of 2019 may just present some of the best conditions for property investors in some time.
She said that this hinges on the outcome of the general election.
“Under Labor’s policy, investors will still be able to negatively gear their properties before a hypothetical start date kicks in. People with the capacity to invest now might be among the last to benefit from a tax arrangement that, either at the next federal election or subsequent votes thereafter, appears doomed at some stage in the future,” Ms Pilkington told REB.
“Labor has re-confirmed plans to remove negative gearing for future investments while grandfathering existing investments should it win government, the odds of which are shortening.”
But Ms Pilkington also said that vacancy rates could increase.
“Housing completions are currently at historic highs and rental vacancy rates are therefore tipped to rise slightly.
“Nevertheless, those with an investment property are in a good position despite the recent price declines, as the outlook for other major economic indicators like household expenditure and employment appear generally sound and there are few distressed sales.”
Preferences
Ms Pilkington also expects to see a change in buyer demand.
“A shift in consumer preferences for larger two- or three-bedroom apartments will continue to emerge as Australian families become more comfortable with apartment living.
“It will be increasingly incumbent on developers to deliver greater amenity in new projects — such as the provision of parks and open spaces, retail shops and services — better transport links and other community facilities to compensate for smaller dwelling sizes without private backyards.
“The current supply cycle is playing out in Sydney and there’s a huge number of dwellings under development. But the future pipeline is subdued in response to the softened outlook, so the cycle will move to an absorption phase in 2019.”
Affordability
Ms Pilkington said that she anticipates an increase in first home buyer activity.
“We believe the market could see a possible increase in activity from first home buyers and investors as price declines settle down to a more [stagnant] state,” she said.
“Affordability is likely to remain a concern, but low interest rates, and the realisation that prices will eventually rise again, could see these two buyer categories become more active.”
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