There’s much more to determining the value of a property than its suburb popularity or proximity to local amenities. Galldon Principal, Don Gallicchio, advises there are a number of factors at play.
“At the moment I would say the availability of credit, low stock levels, and population growth all impact a property’s worth,” he reveals.
But he confirms the government—at the local, state and federal level—has one of the largest roles to play in affecting market conditions.
“The threat of removing negative gearing, which the Labour government was intending to introduce, should they have won the election, had many of my clients concerned,” he states. “Leading up to the election, we noticed buyers, and particularly investors, sitting on the fence, not making decisions to purchase until they knew the state of play.”
And true to form, once these threats were minimised, market activity has picked up, but the Government is still making its presence felt in the real estate sector.
“Council rates, the fire services levy and land tax have particularly impacted the commercial property market,” he adds.
Let’s not forget the recent change to Stamp Duty concession for off the plan properties. Removing investors from being eligible for this savings has impacted values, as has the restrictions and increased Stamp Duty costs incurred by foreign buyers. It can work both ways though, with government expenditure on infrastructure and public transport working in favour of the property market, along with the first home buyer grants and incentives.
This equates to up to $20,000, as well as additional stamp duty concessions being made available by the government, to help future home-owners make their purchase. Of course, there are strict eligibility criteria that have to be met, including:
●Intending to make the home your principal place of residence for at least 12 continuous months ●Be aged 18 or over ●Be an Australian citizen or permanent resident, either by the date of settlement or by the date the home is ready for occupation if it’s being built.
The housing market is often a direct reflection of the current economy, which means it also has an important role to play in affecting property values. “The state of the economy affects the market in a number of ways,” Don confirms. “Confidence in the economy is an important driver. Matters such as job security and the employment rate are extremely important, as are interest rates.”
All things banking
The credit crunch, a fallout from the Hayne Royal Commission, has also impacted property values, with far tighter lending standards affecting what we’re seeing houses and apartments valued at. And then there are rates to consider too.
If the Reserve Bank of Australia raises the official cash rate it influences property affordability, because of the increased competition in the real estate market. Conversely, an interest rate cut equates to more housing affordability and an increase in the value of property prices.
So, what type of market are we in?
The type of market—whether it’s a buyers or seller’s market—also dictates property values. A buyer’s market occurs when supply exceeds demand, and purchasers hold the power in price negotiations. Conversely, it’s a seller’s market when demand outstrips supply. According to Don, the tide is about to turn. “It’s been a buyer’s market of late, however with low stock levels, we are starting to sense we are coming out of the bottom end of the cycle,” he advises. “This is evidenced by the increase in the clearance rate.”
The good news is, the experts at Galldon Real Estate have a wealth of knowledge when it comes to knowing your current property’s worth and assessing the direction the market is headed. To take advantage of their innovative and professional expertise, contact Don on 0418 148 580