For many of us, including pollsters and some commentators, the result of Saturday’s Federal Election came as a surprise. However, I for one was not that surprised and as I suggested in my post last week, many aspects of the housing market, including house prices, would be on many people’s mind as they voted.
For the first time in several election cycles the housing market was a key policy area, and I suggest it proved to be a very sensitive and underestimated one.
The results also proved to my thinking that the ‘Australian Dream’ of homeownership is still very much alive in 2019, and that Australians have not given up on the idea, just the opposite.
The election as demonstrated that voters were looking for hope and opportunities and not charity to achieve their life-goals, and that very much includes the many benefits both social and economic of buying a home.
What we at times refer to as ‘middle-Australia’ was I think looking for sound economic policies that were solid, easy to understand, and so allowed individuals to be self-supporting.
The negativity around some aspects of the housing market may well have been seen as undermining or restricting with many rules the goal of buying a home or investing in property.
I also suggest it’s important to consider the housing market across all of its varied aspects, and that includes current homeowners, first time buyers, investors and anyone who might soon be looking to trade-up or trade-down in the market.
They are all related and that’s a key reason why I believe that housing hit a sensitive nerve with voters.
Both parties did start to acknowledge this, but only towards the end of the campaign when new measures to help FHBs with their deposit were floated as new policies.
However, the election result removes a big question market over many aspects of the market including the fate of some investors who use property as a form of investment to help make them more financially self-reliant.
The result must finally remove negative gearing form the political agenda once and for all.
This also brings me to the topic of superannuation and how the proposed removal of franking credits was a potential negative for the part of the residential property market.
The topic is again related to being self-reliant and not driven by government handouts. My point here is that many FHBs were potentially being helped by their parents. With reduced income caused by the potential loss of franking credits, it’s reasonable to suggest that parents were starting to say ‘wait a minute’ if we forfeit this income we may not be able to help with your home deposit.
This somewhat invisible aspect of the dilemma facing some first time buyers would have potentially impacted a reasonable slice of the FHB market and created further doubt and possibly reduced or red-directed demand.
Leadership and Certainty
At the start of 2019, I nominated a lack of confidence as being the biggest threat to the housing market.
There was a list of factors eroding confidence, one was the Federal Election and now post-election I suggest that market activity will start to accelerate again, and yesterday’s rebound in the share market reinforces this view. However, how fast the breaks come off the housing market will again, very-much depend upon confidence.
The LNP will now be in their third successive term of government and they should be expected to show positive leadership and consistency across all policy areas, and that very much include those related to areas that impact the housing market. They have an obligation to do so.
I’d nominate key areas as superannuation policy, immigration, infrastructure delivery (although that’s also very much a state government realm) and how they manage their legislative response to the Hayne Royal Commission.
Homeownership is also very much driven by a sound business and the employment environment, including the health and profitability of small business.
The wider business community will no doubt be unforgiving if clear leadership and policy does not follow this election victory, delivered with true innovation. This will also directly help the housing market to lift from its current down in the dumps setting.
The election was in part very much related to the housing market. About people wanting to take control of their lives and the restoration of confidence.
That confidence was also over the last 12-18 months badly dinted as the housing market lost steam. As people saw the notional value, and in some cases the real value of their homes slide, and has homeownership was starting to slip-away the country considered the need to reassert economic stability, certainty and confidence.
The election being a vital first step and so remove a cloud that had been hanging over the residential property market.