It’s no use struggling: the federal election – and everything that comes with it – is here. I apologise in advance for banging on about it. George Megalogenis sums it up best in today’s SMH: “For the second time this decade, Australians are poised to remove a federal government without enthusiasm for the alternative.”
Tom McIlroy has outlined what he sees as the key election issues in today’s AFR. Taking from his list, here are four key areas where people in the business of building and selling homes should be paying close attention.
Wages and cost of living: Labor wants to boost personal income by raising the wage floor. The Coalition intends to focus on boosting productivity as a means to stimulating wage growth. The economists universally back the Coalition’s plan over Labor’s, but they are yet to land a body-blow that flattens Labor’s plan; in any case, Chris Bowen and co are sticking to their guns. They’re doing it for the kids, after all.
Negative gearing: we’re yet to see detail on Labor’s proposed NGT changes, which would see it restricted to new homes. If you’re building and selling apartments off-the-plan or homes on commission, this could become a strong selling point when attracting investors. This report suggests investors are taking a wait-and-see approach, and why wouldn’t they? In any case, criticism of Labor’s arithmetic on its NGT intentions continues to escalate this week.
Capital gains tax: Labor intends to halve the 50 per cent CGT tax break. This will mean anyone who needs to for example, sell a home to downsize or upsize into another one, is going to take a hit when it comes to buying power. It could strengthen the case for knock down rebuilds however.
Income tax: Labor is taking a Robin Hood approach to tax, while the Coalition is working to flatten the tax system. Labor reckons it’ll save $286 billion by not adopting a raft of changes in the budget, but it doesn’t exactly have the backing of Treasury; it released figures last night showing that by adopting Labor’s proposals, Australia’s tax-to-GDP ratio will actually go up by a couple of percentage points within the next decade – imposing up to $387 billion in higher taxes on our economy.
The REIA certainly had its ducks lined up for yesterday’s election announcement. It released advertising packs to members yesterday designed to target landlords, tenants, buyers and sellers campaigning against NGT changes on the basis of lower property values and higher rents. The HIA was a little bit better at fence-sitting, saying both sides had problematic approaches – not least of which being a perceived lack of attention to addressing tightened lending.
I’ll admit, the question posed by ABC business reporter, Stephen Letts today hadn’t occur to me, and it’s a good one: as economic challenges mount, is this a contest you’d be better off losing? Get set for a sustained refrain of “I told you so.”
The backdrop today has been provided by NAB Group chief economist Alan Oster, who says Sydney can expect a 20 per cent house price decline from peak to trough, and Melbourne 15 per cent. He expects things to level out in 2020.
And on something completely different: the NSW government yesterday announced that the M4 East tunnel will be open for business come June 1. If you’ve come to know the shade of peeling paint on buildings flanking Parramatta Road a little bit too well on the daily peak hour crawl, this will be good news.