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Federal Elections May Catalyse A Housing Boom

housing boomI remember remarking favourably on Robert Gottliebsen’s recent article about the impending housing boom. On the Business Spectator website I found another piece from him, categorically summing up the possible impact of Federal elections (Coalition is home and dry) on the Australian housing market.

Mr. Stevens may have bitten more than he can chew

Gottliebsen doesn’t mince words while suggesting that the RBA governor has crossed the tether in regards to cash rates. The constant rate slash, according to the veteran columnist, may fetch Mr. Stevens a few brickbats and he will certainly need to validate his act in not so distant a future.

Poor conversion rates for enquiries

While we are witnessing an avalanche of enquiries, the conversion rate (actual deals) has been poor so far. Even buyers want to be doubly convinced about the election results before rushing for the property market hook, line and sinker.

Outer suburbs catching up

Inner-suburban areas in Sydney have been in demand for some time now. From the looks of it, outer suburban areas are also catching pace.

There might be a price explosion in Sydney very soon, one that is triggered by the gap between housing demand and supply.

You can read the original article here.

My clients often ask me how the election may impact the housing market. I won’t say I think too differently from Mr. Gottliebsen. The market is quite likely to rally very strongly though I would not equate it with a boom.

Demand may reach new highs

Shortage of dwelling supply in Sydney will fan demand. As pointed by the veteran columnist, the demand will be further propelled by cash rate cuts and various banking incentives offered to the buying class.

Supply to remain short

However, supply will remain fickle because the same banks will show great reluctance to lend to developers. It has got to do with the mindset that banks have developed since the GFC. They want to err on the side of caution when it comes to financing developers during a perceived boom.

One good coming out of the federal elections

The coalition’s victory will however put a close to the cartel style agreements between the bigwigs among developers and unions. This may greatly impede the factors that command overnight surge in prices, something that can be really harmful for median pricing.

Election results can trigger a housing boom but do you think it can sustain one?