Real Estate Institute of Australia (REIA) president Adrian Kelly said that it was “critical” that policymakers make measured property policy commitments for all parties in the housing market, from first home buyers (FHBs) to investors.
Noting that a federal election could be called as early as August 2021, Mr Kelly said: “In May just prior to the 2019 election, house sales were the lowest in two decades across Australia, which was largely attributed to election commitments from the federal opposition to abolish negative gearing and capital gains tax (CGT) in their current form.
“Given the major role investors played and continue to play in providing housing over the pandemic, it is critical that in the run-in to the election that policies from all sides of politics work for all players in real estate.”
Speaking about the property market, Mr Kelly said that it recorded “respectable” growth over 2020 and predicted that with limited stock and strong demand, property prices should increase further in 2021.
“Traditionally, there is a reduction in the number of house sales over the holiday period due to buyers going away for the festive period, but due to the current restrictions, people are taking advantage of the market conditions while they are unable to travel and looking to buy while they can,” he said.
Recent CoreLogic data for the week ending 10 January showed that home loan activity plunged by over 40 per cent month-on-month, which it attributed to the holiday season slowdown, with sales activity remaining soft.
Mr Kelly said that government stimulus measures and continued low interest rates have been partly responsible for the “resilient” demand for residential housing, adding that the property sector has been vital for Australia’s economic performance.
“Even though growth in new dwelling investment is unlikely in the 2020-21 fiscal year, given the lags between building approvals and construction activity, the forecast for dwelling investment has been revised from -4 per cent in the pre-election Economic and Fiscal Outlook to -3.5 per cent in MYEFO (Mid-Year Economic and Fiscal Outlook),” he said.
Meanwhile, Mr Kelly said that while the winding back of JobKeeper and JobSeeker measures may result in temporary issues for tenants in some capital cities, the current trend to relocate to the regional areas is likely to gain further momentum.
“Overall, the real estate industry looks forward to a positive year for the Australian property market with the promise of an Australian COVID-19 vaccination program allowing life to resume to a new normal,” Mr Kelly concluded.
Malavika Santhebennur is the features editor on the mortgages titles at Momentum Media.
Before joining the team in 2019, Malavika held roles with Money Management and Benchmark Media. She has been writing about financial services for the past six years.