The unexpected election victory of the Coalition is expected to benefit the two largest housing market in Australia, especially now that the Labor Party's plans to change rules surrounding negative gearing and capital gains tax are now likely dead in the water.
Realestate.com.au chief economist Nerida Conisbee told News.com.au that prices would have gone down further if Labor's proposals pushed through. However, with the Coalition's surprise triumph, she said Melbourne and Sydney could be closer to bottoming out.
"It won’t get back to where it was in terms of 10 %-plus growth because if you look at how the landscape has changed, we’ve seen a significant pullback of investor activity. But it’s certainly a more positive environment than it was at the start of the year," she said.
Sydney and Melbourne have already recorded significant annual declines in April at 10.9% and 10%, respectively. From their peaks in 2017, prices in the two cities have now fallen at respective rates of 14.5% and 10.9%.
While other market watchers expect the housing downturn to continue this year, Conisbee believes a turnaround could begin a lot sooner as uncertainties have already been lifted.
"I can’t see anything that is looking more negative as we head into the second half of the year. There’s nothing really negative on the horizon now," she said, adding that an interest-rate by the Reserve Bank of Australia would stimulate the market.
The election result will also benefit home-loan providers as it scraps one significant area of risk, White Funds Management managing director Angus Gluskie told The Sydney Morning Herald.
"People's concerns about the further weakness in the housing market were exacerbated by the removal of negative gearing. If you take that policy change away, it's a boost to sentiment in the housing market and therefore to bank stocks, because housing prices and markets are crucial to bank stocks," she said.
David Ellis, Morningstar's head of banking research, predicts an improvement in investor segment following the Coalition win.
"The rate of decline in house prices has been slowing, and this might just slow that down even further, where it might stabilise for a while," he told The Herald.
On the other hand, CoreLogic head of research Cameron Kusher believes that while the election result gives a little more confidence and stability, there are still challenges the housing markets of Sydney and Melbourne need to overcome before they can see recovery.
"Sydney and Melbourne have become very unaffordable. Interest rates are low, but it’s still a lot harder to get a mortgage than it has been over recent years. Maybe the rate of decline will slow a little bit, but I don’t see this yet as a turning point for the market that bottoming out is necessarily imminent," he told News.com.au.