Within a short space of 2 weeks, there have been 4 great outcomes for the Australian property market. And they couldn’t have come at a better time…
Watch the 50-second video for a quick summary and read further for more details.
1. First Home Loan Deposit Scheme
Just before the election, the Coalition announced its plan to help eligible first homeowners get on the property ladder.
Rather than having to save a 20% deposit, the Government will work with smaller lenders to provide 95% finance, meaning the purchaser will only need to come up with a 5% deposit.
Normally anything over 80% of borrowing will incur Lender’s Mortgage Insurance (LMI) however the Government will subsidise this providing a saving of up to $10,000.
This initiative will help the stability of some of the ‘mortgage belt’ markets at a time well needed.
2. Capital Gains Tax Discount (CGT Discount) and 3. Negative Gearing
It was well publicised that if the Labor party got into power, they were going to make some big changes to property investment policies. One of these was to reduce the CGT discount from 50% to 25%.
Another change was to remove negative gearing benefits from established investment properties and only allow it for those who purchase brand new investment properties.
As a result of the Coalition remaining in Government, these changes will not be introduced which has been welcomed with a big sigh of relief from property investors across the nation.
4. Australian Prudential Regulatory Authority (APRA) looking to relax the assessment rate for home loans
In December 2014 APRA introduced a rule that lenders have to assess whether a borrower can afford their repayments using an interest rate of at least 7 percent. This has made borrowing very difficult for some people, especially those wanting to build a property portfolio.
ARPA revised this rule in May 2019. With interest rates remaining low and even looking like going lower, this should increase borrowing capacity significantly giving better buying power.
Great outcomes for the property market – and for you
Summary of the outcomes:
- Eligible first home owners only need to come up with 5% deposit (rather than 20%)
- CGT discount remains at 50% (rather than 25%)
- Negative gearing benefits apply to all properties (new and old)
- Borrowing assessment rates to be lowered
With all of these things happening, we have gone from what was looking like quite a bleak time ahead to creating some major confidence. This will undoubtedly flow-over into the economy in general.
So when is the right time to buy property?
Experienced investors buy property when it’s right for them. They make it work no matter what the state of the market.
But it’s understandable that many investors were holding their breath in anticipation of the election results – because it was looking ‘interesting’ for investors if the votes had swung the other way.
Well, if you really need a reason to start setting your kids up for their future – or to take charge of your retirement lifestyle – now you’ve got 4 very convincing reasons. If you’re waiting for a good time. NOW is an awesome time.
Overwhelmed? Wondering where and how to start?
My friend, stop procrastinating. You’ve got this.
Do just one easy, little thing NOW to make it happen: Request a callback.
Let’s chat about what you want and come up with a plan to get you there.
We look forward to hearing from you.
“You can’t cross the sea merely by standing and staring at the water.” -Rabindranath Tagore (Bengali polymath and Winner of a Nobel Prize in Literature 1913)