What might happen to the Brisbane housing market after the next federal election?

28 February 2019

On the eve of a potential ALP win at the next Federal election, predictions about the Brisbane residential property market abound. Some of these predictions show a common theme while others downright contradict each other.

As I gaze into the crystal-ball, this could be a potential scenario:         

  • Houses and units are two different markets in Brisbane. The house market seems to be experiencing slow and steady growth but the unit market is in recovery mode.
  • Conditions that are favourable to both markets in the next few months may come from the ALP’s policy on negative gearing and capital gains tax discount. There could well be a temporary increase in demand for existing residential properties in Brisbane as try and snap up properties that may no longer be negatively geared under an ALP government.
  • This may be more pronounced in Brisbane as housing prices are still significantly more affordable here compared with those in Sydney and Melbourne despite the latter’s declining markets and data appear to be suggesting that net migration to Queensland has been on the rise.
  • Any ‘mini boom’ in the Brisbane housing market may also favour the ‘second-hand’ market rather than new builds as there is a perception that older properties generally have bigger floor areas and better ‘guts’ for future improvements. New builds are also not subject to the same negative gearing restrictions if enacted, which may further ease their demand during this period.
  • Naturally, the availability of credit and future interest rate movements would be a big factor affecting whether the mini-boom would be realised in full, which turn on how the lenders would behave due to the impact of the outcome of the Royal Commission on banking.
  • Once the ALP’s policy comes into full force, on the back of the mini-investment boom, there may well be excess residential stock coming onto the market, which may drag existing rental yields down and hamper price growth for some time but normal market forces would eventually prevail to normalise the market.
  • As long as the ALP’s policy persists, there may be a permanent bias in favour of new builds from the investors’ perspective while new home buyers may prefer existing stock to avoid the competition.