There’s nothing like a federal election to slow the wheels of the housing market, many agents say. So when Julia Gillard decided to take Australians to the polls before spring arrived, property insiders were quietly saying their thanks that the whole show would be done and dusted before the biggest sales season of the year arrived.
Within a few weeks, they said, everyone would get back to their day-to-day activities, including the all-important decision of where to live. It’s interesting to note, though, that even though many sellers weren’t keen on going under the hammer on election day, there were some buyers about. Perhaps driven by the low stock levels, auction clearance rates hit 75 per cent in Melbourne and 66 per cent in Sydney on Saturday, although were much lower in Brisbane and Adelaide, at 26 per cent and 30 per cent.
When it comes to the effect of the election, it’s not so much that either major party offered up any overly exciting housing policies, it’s more that buyers and sellers prefer certainty at all levels when they are making such an important decision.
“People see uncertainly as a reason to sit on their hands and do nothing,” says Craig James, the chief economist with CommSec.
“What it means is you may see vendors holding back listing their property for another fortnight or so, which certainly wouldn’t be a positive outcome for the property market, real estate agents in particular.”
However, James questions whether this is necessary. “I suppose what a lot of people have got to ask themselves is, ‘is anything going to change dramatically, if you have a Liberal minority government or a Labor minority government?’”
James says for both sides in the election, property wasn’t a major consideration. “There’s nothing in terms of the major policies that are likely to change things ,” he says. “So I would’ve have thought that vendors and budding buyers should be getting on with business but that may not be the case.”
As we head into spring you would normally expect to see plenty of hot properties come flooding onto the market, which may be delayed now. But David Airey, Real Estate Institute of Australia president, says the industry was already forecasting a quieter than normal spring as the six recent interest rates continue to bite, the market stabilises after some pretty substantial increases earlier in the year, and a cloud from the global economic uncertainty hangs over Australia. “People aren’t confident enough to go delving into the market with any great expectations at this stage,” he says.
Airey doesn’t think the uncertainty will have much impact on people buying and selling places to live in themselves, but he does expect investors will hold off making a decision until the situation is clearer.
One thing that Airey has on his radar is the possibility the major lenders could use a once-in-a-lifetime opportunity to improve their margins while the government is in caretaker mode. He’s not expecting to see the Reserve Bank move on the rates for the rest of the year, but he thinks an opening exists for the banks to make some quiet adjustments.
“There’ll be the least resistance from government to those rises and even if there was resistance or reaction it would be meaningless in a limbo situation,” Airey says. “Effectively we have no national government or a weakened national government, which will allow the banks to have a look at interest rate rises on the break basically. They’ll be taking the opportunity to say ‘gee, now would be a time to tweak up our rates with very little resistance or reaction from the market’, and that worries me a lot.”
When the situation will be resolved is difficult to tell, although that changes minute by minute. There is talk from independent MP Rob Oakeshott about the possibility of heading back to the polls if a solution can’t be found that installs a minority government. Real estate agents around the country have their toes crossed hoping that doesn’t eventuate. From Airey’s point of view a second election would be disastrous and would leave the entire country into a state of limbo.
Carolyn Boyd is a property journalist and keen follower of Australia’s housing market.