As the impact of COVID-19 continues to leave its mark on a range of industries, real estate sector professionals, mortgage brokers and lenders are busily making predictions about what the future for property prices and property development might look like in the months and years to come.
The forecasts highlight the potential for interesting possibilities but time will tell which are actually implemented and which remain as only ideas.
One prediction suggests the scrapping of stamp duty across Australia – something that has the potential to save home-owners hundreds of thousands of dollars and play an important part in boosting the post-Coronoavirus economy.
Stamp Duty Scrapping Would Mean Savings for Buyers
Of course, the buyers that would benefit the most from such a cut would be buyers in blue-chip suburbs, with higher real estate prices, but by abolishing this real estate sale-related tax, the economy could be stimulated in other meaningful ways, with more money spent on the property development industry – something that could mean more jobs for many in the building industry.
Based on median house prices, those in Melbourne’s Toorak would have the opportunity to save a median of a hefty $242,000 with the dumping of the transfer fee, while house-buyers in lower-priced areas would still enjoy savings, but of amounts relative to their own price-ranges for local properties.
When it comes to how it might impact first-home buyers or property investors looking for units, suburbs such as Ashburton and Balwyn North, for example, could be as much as $67,000 cheaper (based on median prices), if stamp duty was scrapped.
Of course, no government enjoys saying goodbye to a lucrative tax but if stamp duty was exchanged for a subsequent land tax, perhaps, the initial boost to the economy could be positive.
It had already been a challenging time in the local property market before COVID-19 hit, and with liquidity already down in the pre-pandemic market, it is set to take a long time to return to sustainable positivity as we all find our footing in this evolving circumstance.
With housing affordability as a focus, though, a change in stamp duty has the power to inject new hope into the market, with seniors more likely to consider downsizing – a move that would add new stock at the other end of the buying market.
Obviously, although it may be a good idea, it is unlikely any change to stamp duty will happen quickly – if at all. In the meantime, with the effect of the ongoing pandemic tipped to see property prices fall by almost 10 per cent, abolition of stamp duty could offer Victorian buyers an incredible bonus that could be enough to get the property market moving again.
Don’t Expect Property Prices to Plummet
For those waiting on a huge downturn in local property prices to benefit from opportunities that flow from that fall, the news may not be as dramatic as predicted, thanks to the commitment to wage subsidy support, including JobSeeker and JobKeeper payments.
These increased welfare payments, coupled with financial institutions offering mortgage holidays, has given many home-owners hope – and the ability to hold on.
One thing worth noticing around conjecture about any impending recession is that, although many lenders have given clients mortgage respite in the past, such as through 2007’s GFC, today’s offer of welfare increases and subsidies are not usually features of significant downturns in the economy. It’s a timely reminder that what we are all living through at the moment may have some economic fall-out, but is still, technically, a health crisis, rather than a traditional financial crisis.
With some states and territories already lifting some pandemic-related restrictions, the visible spike in the number of properties being advertised for sale is a sign that the market may not drop as much as what some people originally thought – and that’s good news for vendors who need to sell.
For advice and support about managing your existing mortgage or new home loan throughout the COVID crisis, talk to loan specialists you can trust at Lending Specialists.