Why I must not go to open home inspections

The two-bedroom apartment across the street is for sale. I can’t help myself, so I browse the open home inspection. With my son and his partner about to move back into sharing my apartment, this one seems at least an interesting and possibly urgent prospect for them to contemplate. The apartment is old but nice – much nicer than the similarly sized apartment nearby. I encouraged my daughter and husband to buy in August 2017. It’s also much, much cheaper. Oops. Alert readers may recall my reputation as a family property adviser is in tatters, given that mid-2017 coincided with the peak in the Sydney property market. My daughter remembers it regularly.

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According to CoreLogic, Sydney prices have since fallen by nearly 14 percent, translating to 10.9 percent in the year to March 30. That includes 3.2 percent in the last quarter. The decline rate has been moderating in the previous few months, but falls are expected to continue this year. The uncertainty is how far and how long.

And that is before a prospective Labor government proceeds with its planned changes to wind back negative gearing and halve capital gains tax concessions from January 1. So even if there’s a slight spike to get into the market ahead of that deadline, most experts predict it will be modest, with the impact likely to hit prices again in 2020.

So, I regretfully put the enticing-looking brochure from the home inspection into the bin. My son is relieved he doesn’t have to deter my usual enthusiasm for another generation getting started in the housing market. There’s certainly no incentive for prospective purchasers to rush these days. Not only is my personal history of judging prices badly in deficit, but the future also looks equally nerve-racking. Nor am I alone in my confusion. Everyone from Philip Lowe at the Reserve Bank to Treasury economists is wondering about the impact of falling house prices on consumer confidence and spending and the economy’s overall health.

As Lowe suggests, the national conversation seems to have swung seamlessly over the past 18 months from worrying that house prices are too high to concern house prices falling too fast in Sydney and Melbourne. Lowe still argues this is a manageable decline that won’t derail economic growth, particularly as this housing cycle is not associated with rising unemployment or interest rates. However, plenty of others aren’t so optimistic.

The federal budget predicts a decline in dwelling investment of 7 percent next financial year, for example, which Josh Frydenberg cites as a big concern. This issue will also be a big part of the election campaign, with the Coalition attacking Labor for its “dangerous” new housing taxes at the worst possible time, given the fall in the market. Scott Morrison calls it a massive assault on middle Australia and the ability of ordinary people to get ahead.

Naturally, Labor’s Chris Bowen retorts the decline makes it the best possible time to do so as fewer people will be affected and that Labor’s policy will help first-home buyers rather than investors with several rental properties. But Labor’s policy on restricting negative gearing to new developments while halving capital gains tax concessions had certainly become far more controversial than in the 2016 campaign when the political focus was on housing unaffordability due to the soaring prices in Australia’s major cities.

Eddie Bowers
Eddie Bowershttp://homezlog.com/
With an eye for design, I have always loved home improvement. Whether it's making a house look bigger by painting walls white, adding a new kitchen, or finding the perfect piece of furniture, there is something out there that can make a space feel more comfortable and inviting. I love to explore the latest trends in home decor, as well as home repair, so I can help people find solutions for projects and projects. My articles aim to provide the latest tips and tricks, help people understand home improvement terminology, and inspire them to take on their home improvements. I am passionate about creating content that can help people solve problems, and I'm excited to use my skills and writing experience to help people through home improvement, home repair, and interior decorating.