Australia’s largest professional body representing independent buyer’s agents is warning home buyers and investors not to delay buying property based on the outcome of the upcoming Federal election.
Real Estate Buyers Agents Association (REBAA) president Rich Harvey said many property investors were nervously awaiting the outcome of the May 18 election fearing a Labor victory would see major reforms to negative gearing and sweeping changes to capital gains tax.
Mr Harvey said softening house prices in Sydney and Melbourne since the controversial policies were first floated, could prompt a re-think.
“Regardless, I’m not convinced most property investors should pull up on their plans because of the potential negative gearing changes,” said Mr Harvey.
“Negative gearing is a path to tax minimisation and it does help ease the burden of holding a property but it shouldn’t be the primary reason to invest.
“If you are relying wholly on negative gearing to prop up your investment, then the problem is with your portfolio, not the policy.
“Investment is a long-term game. The aim is to buy quality property with good fundamentals that can grow over the long-term and not be a huge burden while you hold it.
“If negative gearing is removed for established properties, it will mean investors must carefully consider the rental return before buying as there would be no tax subsidies for ongoing losses.”
Mr Harvey said regardless of the potential changes to negative gearing, investments held before the change comes into effect would be ‘grandfathered’ or excluded.
Likewise Labor’s plans to reduce the discount on capital gains tax from 50 per cent to 25 per cent will also by fully grandfathered, with dates for its implementation yet to be announced.
Labor has proposed to fast-track the negative gearing and capital gains tax reforms to start of 1 January 2020.
“During times of economic uncertainty, softer conditions are more likely and the advantage for buyers is the ability to negotiate a far better price on a quality property,” he said.
“Buying now in the midst of political uncertainty, means you have less competition and you can set yourself up for the long-term hold.
“An independent, experienced buyer’s agent who is working on the ground can you uncover some excellent property gems that will deliver long-term gains.
“If you wait to see what happens at the ballot box; you could miss the boat and your chance to lock in the best possible return.”