What impact will the election have on the Sydney housing market?
The Federal election is scheduled for Saturday 21 May and traditionally the outcome of the federal election has played a key role in shifting the dynamic of the Sydney market.
In May 2019, the Liberal government won the election after Labor had proposed they would grandfather negative gearing and remove franking credits if elected. As a result of the uncertainty around what a Labor victory would mean, the first five months of 2019 saw very low stock levels and clearance rates around 50-60%. Key to this was a drop in investor activity in the market. Once Liberal won the election, by July (6 weeks post election), clearance rates were back up to 75-80%. Stock levels started to increase with the seasonal Spring buying season and the market was just finding a stable balance at the end of 2019 when Covid appeared around the corner.
Regardless of which party wins the upcoming election:
Interest rates will continue to rise through 2022, with further rate rises expected in 2023 & 2024. It is forecast the Reserve Bank of Australia will look to achieve a cash rate of 3-4% by 2024 (currently at 0.35%), meaning interest rates of 5-6% for owner occupiers and 6-7% for investors. Rate increases will be heavily felt in Sydney where mortgages are the largest in the country with the largest mortgages, however, Sydney also holds a lot of wealth.
The supply of homes being put up for sale will decrease through June/July/August because, as prices are fluctuating vendors who do not have to sell will sit back and watch how the market plays out.
The spring buying season (Sept-Dec) will see low stock levels and prices likely to rebound to early 2022 levels as demand for quality properties will increase.
Increased construction costs and material costs will see 'renovators delight' properties and properties needing new bathrooms and kitchens likely to be most impacted by price decreases through 2022 as demand has decreased.
Whether it be Scott Morrison again or Anthony Albanese taking the reigns, this election will not have the direct impact on the housing market that we saw in 2019. However, factoring in all the moving parts, as a buyer, the next few months are your best opportunity to buy at a great value.
If you have found ‘the one’ and would like to engage Purchase with Penny to bid at auction on your behalf, find out more about our Auction Bidding services.
