Late SMSF Tax Returns
Negative Gearing and CGT discounts are here to stay!
Are we at the end of the property downturn? Is it a good time to buy?
Seldom does it happen that within just a week so much transpires that it shakes the economic outlook completely of a nation. From the election results to surprise announcements, every indicator is pointing towards the property market. When Labor was the tipped to win, the property market was only looking for a sliver of hope from the RBA; even a rate change may not have changed much for the gloomy property market of Australia.
However within the last week alone; the coalition won the elections, the RBA indicated rate cuts are on their way, APRA scrapped the minimum servicing rate requirements on home loan borrowing! All of a sudden, these announcements were a sign that the regulator and the government believes the property market has corrected enough and essentially we are close to the bottom of the market. The cycle of correction is hence coming to an end and the market is somewhat bottoming out and now ready to start its revival.
The way it stands, the scrapping of the minimum servicing rate requirement of 7% combined with an interest rate cut in the next RBA meeting should signal the end of the downturn in the property market; however prices may remain flat for a few months before they start to moderately tick upwards.
The other major support comes from the shelving of negative gearing and CGT tax changes. The status quo is maintained at least for the next three years. Negative gearing has gone through the toughest battle of all during this election and it would be extremely difficult for any major party to back this come campaign time for the next mandate.
Added to the mix is the coalition’s election promise of government support towards assisting first home buyers funds needed for a deposit and you have all the necessary ingredients for the next uptick in the property market.
Globally credit is still coming in slow and that is the major issue going forward. The way global banking works is that all banks are interdependent for credit. When the US puts a freeze on credit the whole world freezes and when they turn the credit switch “ON”, everyone starts receiving cheap subsidised money creating excess liquidity in the market along with easy cash flow resulting in Inflation. This is one aspect that will ensure solid growth within the property market.
The way it stands currently and as far as the Australian federal government policy support matters, all of bureaucracy has indicated that this is the bottom of the market and there might only be little space for a further correction in this market. The message is hence loud and clear. The positive side to the story is that all the talk about us being in a property bubble has now deflated from sight and the Australian housing market looks quite healthy and sound.
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