A Coalition government and what it means for Melbourne housing

The votes have been cast and the answer is in: The people of Australia have decided that the Liberal National Coalition of Australia is here to stay for another election period. Now that the dust has settled over a rollercoaster of an election, it’s time to look forward to what the re-elected government means for the future of housing in Melbourne.

Negative gearing likely here to stay

After an intense campaign from a number of industry bodies, most notably the Real Estate Institute of Australia (REIA), it was clear that negative gearing was going to take centre-stage in the election. Labor was pushing for a shake-up of the rules around the kinds of properties this particular tax deduction could be applied to, while the Coalition seemed staunchly opposed to any changes at all.

Now that the Coalition has settled back into power, it appears that negative gearing is going to remain as it is – likely causing a sigh of relief among many investors interested in Melbourne real estate. However, it is not quite so clear-cut, particularly considering the narrow win margin that the Coalition managed to achieve. Even REIA CEO Jock Kreitals has expressed concerns that negative gearing changes may still be on the table.

“With some crossbench Senators refusing to rule out support for changes to negative gearing, it is possible that the Government may be forced to consider changes if it looks to win support on other issues,” he explained.

There may still be some political machinations that could get some form of negative gearing changes through, so keep an eye out Melbourne investors.

Housing affordability in question

It’s well-known that Melbourne has one of the fastest-growing property markets in the country, having caught up to even Sydney over the last few months according to CoreLogic RP Data figures. While this has been excellent for investors, it has caused some issues for first home buyers or others who are looking for affordability in the heart of the city.

Melbourne isn’t the only place with this problem – it’s nearly an Australia-wide phenomenon. This made it a bugbear of the election, and was part of the reason that Labor was pushing so hard for negative gearing reform. On the Coalition’s side, there is more of an emphasis on improving infrastructure, such as the Monash Freeway in Melbourne, which is intended to reduce congestion along the M1 corridor.

The Smart Cities plan was also a major part of the plan from the Coalition, as was the reformation of the Australian Building and Construction Commission – part of the reason for the double dissolution. The Property Council for one has voiced their support for this refreshed body, intended to help improve conditions in the construction market, and we could see smoother build projects across Melbourne as a result: An important factor for Australia’s fastest-growing city.

Looking to the future

For the time being, Melbourne continues to be one of the most popular cities in Australia, and the prices reflect that. While there are a slew of apartment projects on the way that could ease the price gain and promote affordability, the outer suburbs (particularly in the north) remain the places to head to if you need to find the next property hotspot.

In terms of the election, it remains to be seen what the Smart Cities plan and the City Deals will do for Melbourne, while negative gearing will likely still remain as it is, continuing to promote easier investment in the Victorian capital. Elections have plenty of changes in store, not all of them immediately apparent – but if you want to stay on top of your real estate needs, make sure you get in touch with the team at Nelson Alexander.

Regardless of the election outcomes, we can help make your portfolio work for you.