What’s the impact of the Labor win for property owners?
With Labor securing another term, home owners and investors alike may well be wondering what this means, and what to expect next.
At the moment, it’s a wait and see situation; so let’s look at what we already know about Labor’s policies relating to property, and explore some of the other factors which may affect it:
1. Housing affordability and first home buyer support
One of Labor’s key election promises was to tackle the issue of housing affordability. With house prices reaching record highs, particularly in major cities, Labor has made it a priority to assist first-time buyers in entering the market.
- First Home Buyer Support
Labor has committed to expanding initiatives that help first home buyers get into the market, such as increasing access to the First Home Deposit Scheme and expanding the First Home Super Saver Scheme. Designed to ease the burden of saving for a traditional deposit, these programs allow first-time buyers to use their superannuation to save for a home deposit.
For homeowners, particularly those looking to sell and upgrade, this could result in an increase in demand from first-time buyers, potentially driving up prices in certain markets. Areas that are more affordable for first-time buyers may also experience stronger price growth.
- Social and affordable housing
With the aim of alleviating the pressure on the rental market and reduce homelessness, Labor also promised to boost the supply of affordable and social housing by investing in building new affordable homes and increase funding for public housing.
The impact could be twofold. A more affordable housing supply might stabilise rents in some areas, easing the pressure on rental prices. However, the additional supply could potentially reduce demand for private rental properties, particularly in low-income areas, which could impact rental yields.
2. Will changes to Capital Gains Tax (CGT) and negative gearing be back on the table?
In the run up to the election, the Greens Party was pushing for changes to negative gearing and capital gains tax (CGT) exemptions; however, Labor consistently confirmed it would maintain current negative gearing and capital gains tax arrangements, ensuring investor confidence and stability in the rental market. If we hear anything different, we’ll let you know!
3. Rent control and tenant protection laws
Labor has also placed a focus on improving tenant rights. With many tenants struggling with high rents and limited security of tenure, the Labor Party has already introduced stronger protections for renters, including national standards for rental laws, longer lease terms, and more protections against rent increases.
For property investors, these changes could have a mixed impact. Rent control measures could limit how much landlords can charge tenants, which may affect the profitability of rental properties.
However, longer leases and better tenant protections could reduce vacancy rates and provide a more stable income stream for landlords who are willing to invest in properties that appeal to long-term renters.
4. Environmental and sustainability policies
Labor has also made it clear they intend to prioritise environmental sustainability in housing. This includes incentivising the construction of energy-efficient homes and investing in retrofitting existing properties to make them more sustainable.
For homeowners, these policies could increase the value of properties that are energy-efficient – there is growing demand for homes that reduce utility costs and carbon footprints. Homeowners who invest in solar panels, energy-efficient appliances, and other green upgrades may see an increase in property values as buyers become more eco-conscious.
But for property investors, this could be a double-edged sword; while investing in sustainable upgrades could increase a property’s appeal to renters, who may be willing to pay more for an energy-efficient home, the costs of retrofitting older buildings could eat into profit margins.
5. Interest rates and monetary policy
While Labor does not directly control interest rates, the party’s economic policies could influence monetary policy decisions made by the Reserve Bank of Australia (RBA). For instance, if Labor’s policies, such as investing in infrastructure projects and social housing, successfully stimulate economic growth, the RBA may opt to keep interest rates lower for longer. This would foster further investment and spending. Lower interest rates are generally favourable for both homeowners and investors, as they reduce mortgage repayments and make property more affordable.
However, if inflation concerns rise due to a strong economic recovery, interest rates could increase, which would put upward pressure on borrowing costs. For homeowners, higher rates could make mortgages more expensive, and for investors, rising rates could increase the cost of financing investment properties, potentially slowing down the property market.
Whether you’re a home owner wanting to sell, or a property investor needing our property management services, we’ll keep you updated on what the market is dictating, government policies and legislation, explain what they could mean for you and give you the information so you can be confident you are making informed decisions.
We want you to get the best from your asset; our experienced sales team, and property management team headed up by industry award-winner Kellie Andriessen, makes this happen.
Call us on 02 4954 8833, send us an email to mail@apnewcastle.com.au or visit us in person in our Cardiff office to find out more.