With the date for elections set as 2nd of July, have you ascertained what your vote is going to cost you in the near future?

The real estate sector accounts for almost 11.5% of the country’s GDP and if you are a part of the real estate market or soon aspire to be, the upcoming elections and their results can impact your real estate dreams in more ways than one.

Undoubtedly, with RBA slashing the interest rates to a record low with anticipation of further cuts, the Brexit outcome and elections poised for 2nd of July, an average voter can be found sitting on the fence wondering about the impact of their voting choice on their wallet as well as the financial health of the nation.

So how will the upcoming elections affect home loans?

Many real estate investors consider the election timing to be most opportune, as it will not impact the spring-time sales. Winters, traditionally, do not see very high real estate activity and the markets have been performing up to expectations. However, the upcoming elections can change that. And even though there is a rush to fix your home loan at the currently low prices, is it really the right time?

One can neither predict the election results nor the mortgage rates in the future, but the following outcomes of the upcoming elections will definitely impact your home loan rates and repayments.

Negative Gearing is the hottest subject this election season; Labor intends to restrict negative gearing on investments in houses built after 1 July 2017. Investments made prior to this date would remain unaffected. Turnbull government on the other hand, if re-elected, will make no changes to negative gearing.

The Real Estate market will suffer another blow as Labor proposes to reduce Capital Gains Tax discount by 50% (that is 25%) on assets purchased after 1 July 2017. Increased stamp duties, land tax and surcharges on foreign investors will further decrease investor activity across the country.

While Labor claims that negative gearing reforms will make it easier for Gen Y to enter the property market by making it much more affordable, it is predicted by many that property prices would fall significantly, thanks to this move. This poses risks for investors whose properties would be devalued and especially for those buying off-the plan. As investors would want to make good their loss through rental income, experts predict rents to go up by up to 6%.

With negative gearing out of the way, investors would not be able to offset their losses, leading to lower investments in real estate, consequently lesser investment loan approvals. This could mean more first home buyers in the market and higher competition between banks to offer competitive rates to first-home buyers. You can compare home loan deals on HashChing for the best rates in the market.

For existing property owners, with property prices diving low, they would be losing out on equity, which means refinancing your home loan to use your equity for meeting other financial goals may get tougher.

Labor, Liberals or Greens – the choice can significantly affect your future – financial and otherwise. Yet decided what would keep your wallet swinging happy?
By Vidhu Bajaj


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