I don’t know if anyone else feels the same, but its nice to have fewer election signs
I don’t know if anyone else feels the same, but its nice to have fewer election signs and more “open home” signs out on the streets again as we move past the uncertainty of the Federal election and get back to business.
From a housing perspective, we should now start to see the meat of Labor’s national policies, including the expanded rollout of the Shared Equity Scheme and the First Home Buyer Deposit Guarantee, the latter now providing the opportunity to ALL first home buyers (FHB) to purchase with just 5% down, and no Lenders Mortgage Insurance (LMI).
Lending requirements will still be in place, and potential buyers must still be in a position to make their repayments (with a sizable buffer) in order to borrow in the first place, but with the required deposit now potentially a quarter of previous expectations, more buyers can act faster to get into the market. Expect activity in this segment to boom, and even greater levels of competition locally up to the $650,000 mark or higher. Combined with $30,000 on new builds, we have the recipe for another boom in FHB backed construction, if only we had the land to match the potential demand. Unfortunately for Cairns, that is not likely to be the case this year, or for some time.
Beyond specific policies and the general sigh of relief that accompanies a majority government (regardless of party, the market favours certainty), the Reserve Bank of Australia’s next board meeting is tipped to be a big one, with an increasing number of major banks now considering a rate cut all but a certainty, and the potential for a double rate cut in response to global trade turmoil (read: Trump).
The first rate cut in the cycle has already boosted buyer confidence with the expectation of more. Seeing these actually unfold should provide some much needed relief to borrowers squeezed by rates which tripled in the space of 24 months, and provide an opportunity for those priced out off housing mobility (particularly those unable to refinance at higher rates) to once again make moves.
On the topic of financing, AMP has now come out with an interest only loan product for home purchases, controversially allowing you to borrow to purchase your own home without paying a cent of the principal for the first decade. Each to their own, but the cost of easing cashflow upfront could see customers shouldering more dead for longer – particularly risky without high capital growth. It will be interesting to see if it’s a blip or the start off a trend…