The Gold Coast property market may be getting an unexpected shot in the arm from the federal election.
After a quiet finish to 2018, during which the median house price rose by only 1.6 per cent and units were down slightly by 1.2 per cent, Ray White Surfers Paradise CEO Andrew Bell has noted an increasing sense of urgency among buyers eager to lock in a purchase sooner rather than later.
These buyers were factoring in a change of government at the next federal election and the likelihood of changes to the tax treatment of investment properties, as previously signalled by Labor, he said.
“Elections often create uncertainty in the market, but this time it’s a little different because of proposed changes mooted by the Labor Party,” Bell said.
“The market is well and truly factoring a Labor victory and the likelihood of major changes to the taxation regime for property owners.
“Many are buying now to take advantage of the grandfathering provisions proposed by Labor for existing properties.”
Labor’s plans include the abolition of negative gearing on established properties and a reduction of the capital gains discount from 50 per cent to 25 per cent. Negative gearing would remain in place for newly built homes and apartments.
The current rules for capital gains tax and negative gearing would still apply for investors who already own properties.
“The proposed changes are the most significant in a generation for the property market and that’s prompted many buyers to bring forward their plans to step into the market,” Bell said.
“We tapped into this thought process in the planning for The Event last month, which led to an exceptional clearance rate during and following the auction program.”
Bell said the election stimulus had coincided with a cyclical increase in buyer inquiries for Gold Coast property from local and interstate investors.
“We’re certainly seeing an uptick in inquiry from investors keen to buy now before any of the proposed changes are made,” he said.
Bell has warned the proposed changes to property tax rules will affect the broader market, especially those who are unprepared.
“However, there are significant advantages for those who buy properties before these new laws come into effect,” he said.
“The market is definitely more anxious about what’s coming but there are many buyers looking to lock in their position now well ahead of the changes.”
Australia’s biggest auction event, held last month on the Gold Coast, reported a clearance rate of 60 per cent and rising, making it among the most successful RWSP auction programs held on the glitter strip, Bell said.
“There are compelling reasons still in play to support the Gold Coast property market going forward, and we don’t believe that will change any time soon,” he said.
“Strong migration rates, combined with the strength and diversity of the local economy should see buyer activity hold up well throughout the year.”