What will the Federal Election mean for Australia’s Property Market?

 In Industry Updates

With the Federal election now secured for May 18, now is the time to have a close look at the policies being put forward by both major parties in regards to Australia’s property market and what they will mean for you as an Investor or First Home Buyer.

If you listen to the polls, the latest findings still have Labor tipped to win this years election and this possible change in government could impact the Australian property market dramatically. While elections do often bring uncertainty, the proposed changes by the Labor party bring unique challenges and potential advantages for the property market this time around.

To help you dissect what these changes mean for you, we’ve outlined the main benefits and challenges to investors and first home buyers below, to help you and your family make an informed decision when investing in property in the coming months.


1.Changes to Capital gains tax and Negative Gearing

The two biggest policy changes to affect investors in the Australian property market is Labor’s proposed plan to abolish negative gearing on existing homes bought in the future, as well as the reduction to the capital gains discount. The concession is planned to be reduced dramatically from 50% down to 25%.

However, negative gearing will remain for newly built homes, as well as for investors who already own properties (which means that those already benefiting from the scheme will continue to do so). This is fantastic news for first home buyers getting into the market as well as investors who can get in before the changes are made. It’s also a fantastic opportunity to build new, and take advantage of the many cost benefits that come with building a new home, duplex or dual occupancy dwelling.

In regard to first home buyers: “It will make the market less attractive to investors, as their choice of property will be more limited, in terms of what properties they can negatively gear… which will mean less competition at auctions and a fall in prices,” AMP Capital Chief Economist Shane Oliver offers.  These changes are in an attempt to tilt the playing field in favour of first-home buyers and are a great opportunity for those getting into the property market for the first time or wanting to build their dream home or investment.


2. Building & Buying New

The good news is that buyers of newly built property are still able to negatively gear their investments for tax purposes. This is great if you are building your own or buying a new property to invest in and rent out for additional income. It is also great news for property developers, as, if these changes are made it will make building new property even more attractive and cost effective for investors by allowing them to maximise land through dual occupancy or duplex buildings.  This policy should also be good news for buyers as it will make homes cheaper to buy.

Ultimately, Labor’s proposed changes to negative gearing will make it easier for first-home buyers to get a foot on the property ladder, as it they will face less competition from investors who often fight for the same properties as first-home buyers. Now the best choice for investors is to build new.


3. Falling House prices and the banking royal commission

Labor’s proposed changes to capital gains tax and negative gearing are likely to contribute to the fall in house prices that we have been experiencing across Australia. Luckily, Newcastle and the Hunter Region are likely to be less affected than the major cities, but we will still likely experience a drop of some kind. Along with the changes to mortgage lending, loans approvals have been harder to get slowing the property market substantially in certain areas.

This means buyers could find it harder to access the finance needed to buy a house after the election, no matter who wins. For first home buyers; taking advantage of the lower property prices, the lowered competition and falling house prices, it’s a great time to jump into property investment while many other investors struggle to get finance.


Taking that first step into the property market can be a daunting task for most people, especially with the changes expected to occur in policies over the coming months. But if you are a first home buyer or investor looking to build new, then these proposed changes could well be in your favour.

When you build a new home, you’re creating a brand new living environment from scratch that is uniquely yours, based on the lifestyle you desire and on the functional needs of you and your family. With substantial government incentives to build new, the added benefit of fixed price contracts, no stamp duty, completely customisable designs, and the simple fact that building new often costs less than buying an existing home, building is fast becoming a much smarter way to get your foot in the door of the property market or invest.

If you are looking for advice or how to maximise your investment or take that first step into property, get in touch with the team at Macquarie Knight Constructions. We specialise in creating lasting wealth opportunities for our clients and our Property Specialists will sit with you individually to find a property solution that best fits your needs. We partner with a range of amazing suppliers and finance brokers that can help first home buyers get to where they need to be to start their journey and even have a Property Management arm to provide the end to end solution for investors.

Head to our Services for more information or give Contact Us today!

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