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Today in property: CGT an election sleeper, construction wages down, has the market troughed?

Two sleeps until the May 18 federal election, and housing affordability has become a so-called "key battleground" in the content's final days. Even though the Coalition's First Home Buyer Loan Scheme announced on Sunday was quickly adopted by Labor, negative gearing continues to provide plenty of fuel for he said, she said between the major parties.

It was fantastic to see veteran property industry reporter and former AFR property editor, Robert Harley back in the paper today, giving an historical perspective on the dangers of introducing changes to negative gearing at this time. His view is that while the changes will have little long term effect, the short term risks of choking supply and putting further pressure on investor demand present real risks to an already struggling sector and economy.

The Grattan Institute doesn't share his view. In a piece that has run on ABC online and in The Conversation, it argues that changing NGT and Capital Gains Tax rules would do more for increasing home ownership than the proposed FHB Loan Scheme, by reducing competition from investors. A more sinister perspective offered in today's AFR from the first head of the Australian Prudential Regulation Authority, Jeffrey Carmichael; he says the government should be staying away from offering financial services, and the FHB scheme could put us on the slippery slope that let to the GFC.

(Side note: speaking of the GFC, the problems we're facing here in Australia aren't unique. This piece talks about how GDP growth in recent years in the US has been fueled by government spending and debt, as well as - you guessed it - mortgage debt.)

The hit to investors seems a safe bet. AMP Capital chief economist Shane Oliver told the ABC's 7:30 the aspect of Labor's proposals that is likely to have the biggest impact on investment is the Capital Gains Tax changes. While NGT has taken the limelight during this election campaign, it will only impact around 10 per cent of property investors - while the CGT changes will hit everyone.

Then there's the question of negative equity, which has become more of an issue since ScoMo stepped up to help first home buyers on Sunday. Don't fret, however - Labor's Treasury spokesman Chris Bowen calmed the farm yesterday by telling us all not to worry if housing prices fall further. "They'll go up again."

Overall, the image attached to today's missive is taken from The Australian collecting opinions from the Real Estate Institute of Australia president Adrian Kelly, Grattan Institute's Danielle Wood and the Housing Industry Association chief economist Tim Reardon on the schemes. It illustrates a definite split along party lines and stakeholder interests.

Meanwhile, calls from buyer advocates that the market has troughed and the "window for bargain buys is closing fast" have been disputed by SQM Research, who said the market has further to fall. HSBC's chief economist, Paul Bloxham however, said there are early signs of a stabilisation during the second half of this year.

The ABS will be releasing the latest job figures today, and all eyes will be on the numbers as an indicator of whether the Reserve Bank is likely to subsequently move on an interest rate cut. The ABS released its latest Wage Price Index yesterday that showed construction job wage growth is at historically low levels, reminding us that close to 50,000 sector jobs have been lost in the year to February.

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