Getting a new Federal Government doesn’t happen very often. We’ve only had five changes in almost 40 years.
Since it’s such a rare occurrence, perhaps we should brace for a barrage of new changes to affect real estate owners and investors, right?
Wrong. The biggest change you can expect under our new Coalition government is an end to flying-by-the-seat of your pants changes to tax rules and other policies that affect investments and other money matters.
Sure, governments can affect markets when they want to. Like during the GFC when they showered first-home buyers with extra grants, only to cause a mini boom where much of the gains went to developers and house prices were soft for several years once the incentives were wound back.
There have been some calls to remove negative gearing tax breaks for property investors, but that was tried unsuccessfully in the 1980s and sparked fears of a huge shortage in rental properties. If anything, negative gearing benefits may be reduced a little at some time in the future but don’t expect it for several years.
The Abbott Government has already signalled it will take a careful approach to changing laws, and has outlined its key focus areas – none of which involve real estate.
Property is still rebounding from a slump, so to turn the screws now on millions of property owners would be political suicide. On the flip side, tight budgets on state and federal levels and ultra-low interest rates suggest we shouldn’t expect any handouts either, or changes to the states’ punitive land tax systems.
More likely to affect property owners and investors are forces beyond the government’s control. Interest rates could go either way at the moment, and a sharp rise would hurt many. The domestic and global economies remain shaky, unemployment is rising and consumer confidence is still low.
Overall, the property sector should expect a hands-off approach from our fifth new government in four decades.
Anthony Keane, The Advertiser Real Estate, 13th September 2013
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