Here’s what a Labor victory means for the property market
With a Labor government taking the reins for the first time in nine years, homeowners may be wondering what this means for the property market.
Despite the change in management, real estate data expert Arjun Paliwal predicted that business would be business as usual.
“It’s not a left turn or a right turn – it’s kind of like a straight line,” Paliwal said.
Like the Coalition, the Labor Party has promised several different policies aimed at helping those excluded from the housing market.
The bulk of these policies are designed to help people by increasing their purchasing power, which has the side effect of driving up house prices as buyers have more money to spend.
However, Labor Party schemes to help first-time home buyers are likely to have less of an inflationary effect than the Liberal Party’s Super Home Buyer Scheme, which many experts say has caused house prices to skyrocket.
The Labor’s flagship housing affordability policy is the Purchase Assistance Program.
Under this program, the new government plans to contribute up to 30% of the purchase price for existing properties and up to 40% for new construction for eligible households.
The program would be available to people earning less than $90,000 a year – $120,000 for couples – and will be capped at 10,000 places per year.
Paliwal said people were unlikely to immediately jump on this home capital scheme, meaning its impact would take some time to be felt in the property market.
“I think a lot of people will have a lot of questions on their minds,” Paliwal said.
“I don’t think customers will have a clear understanding right away.”
However, Paliwal expected rapid uptake of the Regional First Home Guarantee, which will help 10,000 regional Australian families buy their first home each year.
The regional home guarantee was announced as an extension of other home guarantee programs initially launched by the coalition government.
Backed by Labour, these schemes allow buyers to buy a house with a down payment of 5% or 2%, depending on their eligibility, with the remaining 15% of the loan guaranteed by the government.
Labor has also promised to raise price caps to make the scheme more useful for people trying to enter the booming housing market.
Paliwal said the continuation of these programs would add “a little more demand and support to that first-time buyer base.”
“As for the real estate market over the next six to 12 months, other than an improvement in demand from first-time home buyers, I don’t think there’s anything that can steer it in a one way or the other depending on the arrival of work. government,” he said.
More money in the household
In the longer term, Paliwal said labor policies aimed at reducing household costs, such as increased subsidies for childcare, would translate into a bit more liquidity in household finances.
He said cutting taxes, increasing subsidies and an increase in the minimum wage would all increase household budgets.
“The benefit of that is there’s obviously a bigger cushion for the rising cost of living, but at the same time more money in households also equates to more demand, which will continue to do drive up that cost of living,” he said.
“So it’s a catch 22.”