Sydney’s median home price is now forecast to drop a further 6 per cent to 9 per cent next year.
Labor’s planned changes to negative gearing will be so dangerous during the property market’s current downturn they may “trip the economy into a recession’’, experts have warned.
Many industry figures are tipping Australia’s ongoing housing slump to stretch on for longer than previously expected — and a Labor Party win at the next federal election could be a major factor in the downturn continuing.
“Quite frankly, implementing these changes (to negative gearing) during a housing downturn is very risky and may trip the economy into a recession,” SQM Research director Louis Christopher said yesterday.
Sydney’s median home price is now forecast to drop a further 6 per cent to 9 per cent next year, with further falls expected over 2020, according to new modelling by SQM Research.
With Sydney prices already down 7.4 per cent over the past year, the 2019 falls would leave home values a total 12-19 per cent lower than in 2017.
The modelling assumed a slowing economy, an unchanged cash rate, a stable Australian dollar and a Labor Party win at the next federal election.
Prices would drop by a marginally lower 3-6 per cent next year if the Coalition held government next year, SQM reported.
This was due to the major parties’ different housing policies — the ALP has proposed cutting negative gearing tax concessions, while the Coalition has vowed to retain them.
Mr Christopher stressed the ALP’s proposed changes would be extremely dangerous for the market.
Labor’s planned changes to negative gearing will be so dangerous during the property market’s current downturn they may “trip the economy into a recession’’, experts have warned.
He added that 2019 falls in prices would be even higher — up to 11 per cent — if banks chose to raise their lending rates independently of the Reserve Bank.
On the other hand, if the RBA cut the cash rate next year and banks passed the cut on, Sydney prices would likely move zero to -3 per cent, he said.
PK Property Buyers Agents director Peter Kelaher said falling prices meant it was “time for buyers to strike”.
December and January would offer particularly good deals, he added.
Falling prices mean it’s “time for buyers to strike”.
“Agents will be dying to get rid of their properties and will help push through sales very hard,” Mr Kelaher said.
“There will also be vendors with larger blocks who want to sell before the New Year for tax reasons or just to get the property off their hands so they enjoy their Christmas.
“This period will offer particularly good buying this year because the market is down and vendors know it.” Real estate analyst Andrew Wilson of My Housing Market said buyers who “hold their nerve” will be at an advantage.
Source: https://www.realestate.com.au/news/grim-recession-warning-over-labors-negative-gearing-changes/
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