Australians will head to the polls in May, and the possibility of a change of government could see empty nesters put plans to downsize on hold.
If there’s one thing consumers don’t like, it’s uncertainty – especially when they’re about to complete major transactions like buying and selling property.
This ‘wait and see’ approach can be particularly tempting in the lead up to the current Federal election. Labor’s proposed changes to negative gearing and capital gains tax discounts directly impact the property market.
The thing is, there can be good reasons why now may be an ideal time to put your downsizing plans into action.
For starters, there may be signs that the ice is beginning to thaw. Figures from research group CoreLogic show that property values nationally fell by 0.6% in March – the lowest month-on-month dip since last October. CoreLogic believes the pace of price falls appears to be slowing, though of course this varies between markets.
First home buyers are already taking advantage of improved housing affordability, and comparison site Mozo says that over recent weeks around 23 lenders have cut their home loan rates. This is a reversal of the independent rate hikes we saw among several lenders in 2018, and it could certainly make it more compelling for upgraders to head back into the market.
More to the point, some pundits are tipping that if Labor comes to power, we could see investor-led demand drive a property market rally. The idea is that investors may rush to take up properties before Labor’s proposed ban on negative gearing for established dwellings takes effect (which at this point is earmarked to happen from 1 January 2020).
While both sides of politics have left the downsizing super contribution untouched, Labor is pledging to lower the annual limit for after-tax super contributions to $75,000. For empty nesters thinking about making catch-up payments to super, this is something to be aware of. At this stage, no start date for this policy been announced.
Of course, if the Coalition returns to power, it’s pretty much business as usual in terms of the rules of investing in property or super.
When you’re planning for something as important as housing options for your next life stage, it makes sense to carefully weigh up your choice of options. The present market allows downsizers time to inspect and reflect on different properties, and the icing on the cake is that we’re seeing some exceptional developments near completion in several state capitals.
Whatever uncertainties the Federal election may bring, the property market is ripe with opportunities for downsizers
Greg Oddy is Director of Sales and Marketing at Downsizing.com.au