Ray White boss Brian White thinks Coalition return will trigger end of real estate downturn

The Ray White chairman Brian White has called the bottom of the property market in the wake of the Coalition’s return to government.

Although the latest price data - for the first two thirds of May – shows a market still in decline albeit with a moderation in the pace of price.

Labor’s planned wind back of the negative gearing and capital gains tax discounts along with opposition Treasury spokesman Chris Bowen’s dismissal of people’s concerns over the risk of negative ­equity in their homes had “ricocheted through the whole community”, Mr White told The Australian.

Brian White noted the market had worries over Labor’s policies and there had been uncertainty surrounding the election which had been a drag on confidence.

Prices in both Sydney and Melbourne have fallen more than 10 per cent over the past year, with values dropping 7.2 per cent on a national basis, according to CoreLogic.

Not all commentators expect an end to the downturn.

In an article by the AFR, Aussie Home loan founder John Symonds said the “confidence” levels would now steady instead of worsen.
 
Symonds there would be "a boost for confidence."

"The property market will settle down again now. It is going back to health,” he said.

AMP Capital's Shane Oliver saying "the removal of the threat to negative gearing and the capital gains tax discount and a slowing in new supply next year will help the property market bottom out short of the worst case falls some are putting out there."

Goldman Sachs economists are forecasting a "moderate positive shock to sentiment in the corporate sector and a more meaningful one in the housing sector".

The REA Group warned earlier this month that the market conditions are "not expected to improve in the short term", noting slowing listing volumes given the distractions of the federal election as well as the Easter and Anzac Day long weekends in April.

The post election analysis comes after all the April and May marketing interruptions which saw Ray White offices record a 14% drop in sales on April 2018, the Ray White board director Dan White noted last week.

"Looking back on April, it was a tough month and we are actually glad it’s now behind us given all the public holidays, school holidays and the federal election campaign getting underway," White said.

Brian White affirmed that lifting restrictions on credit would be key to any recovery in the markets.

“Banking policy will be critical,” Mr White said.

“A cut from the RBA will be useful but this is one downturn where interest rates had no impact.”

He said the Reserve Bank’s fear of a further declining housing market would be eased with the risks of Labor’s policy removed.

According to Ray White Surfers Paradise Group CEO Andrew Bell, now that the election is over, "one of the major impediments on the real estate market has been removed and we have greater clarity and certainty about the lay of the land."

“There’s been a lot of negativity around this election which has impacted consumer confidence, and this comes on top of a challenging year that has been impacted by tighter lending conditions that have put the brakes on buyer activity.

“There were massive fears about the effects of the proposed changes to negative gearing proposed by Labor,” said Mr Bell.

“That would have put the real estate market in uncharted waters and would have undeniably had major effects, particularly in established neighbourhoods that predominately have second-hand properties.”

Bell suggested Labor’s policy on negative gearing on new properties was likely to have channelled more capital into new developments. 

“There’s no question it would have been a boost to the volume of buyers of new projects, but so many of these are not in areas where tenants are seeking rental accommodation.

“It would have led to values in some suburbs being boosted artificially through added demand, while other suburbs would have suffered huge declines in the volume of buyers. It would have been simply unfair on existing house-owners in those suburbs.”