Property Supply

There is still lots of commentary around last weeks federal budget and the proposed changes to Negative Gearing and Capital Gains Tax. What we have initially seen and expect to happen is that the changes reduce the amount of investors buying properties making it easier for first home buyers to get into the market. Prices on smaller homes and apartments will soften slightly. On the back of less investors buying properties as they can’t benefit from negative gearing anymore there will be a smaller pool of rental properties and prices for rentals will rises slightly. With regards to local property investors most hold onto their properties long term and the changes do not really affect them if the investment plan is 10-20 years.

The commentary on the budget seems to miss that the reason property prices are so high in Sydney is that we are not building enough dwells to keep up with demand. There is a property shortage. For many developers the high cost of property sites, the difficulty to get finance and the price of it, government red tape that increases costs, increased building costs, both materials and labour do not add up to a profit when they go to sell. Both the Federal and NSW Governments are trying to make it easy to build but it will take time. Locally there is always going to be a scarcity of property just due to the geography of the Northern Beaches even with new development. Also the amount of free-standing homes will only get smaller over time. For people looking to move now if the right property pops up - I still feel it is a fantastic time to be buying.