A leading real estate industry advocate says the first half of 2019 could be an ideal time to buy in areas such as the Illawarra.
This includes investors looking to benefit from current tax arrangements before potential changes to negative gearing kick in.
Real Estate Institute of NSW president Leanne Pilkington said the first half of 2019 might provide some of the best conditions for property investors in some time, including in areas such as the Illawarra.
“We all know that prices are down… And interest rates are still low,” she said.
“If the Labor government gets in, they’ve been talking about what they’re going to do with negative gearing, but they’ve also said they’ll grandfather it.
“So if investors want to take the opportunity before May, it’s the time to do it.”
Should Labor win the federal election in May, the party has promised to restrict all future negative gearing to new homes only.
The 50 per cent capital gains tax deduction for investors who have held an asset longer than a year will be halved to 25 per cent.
Labor says it will limit negative gearing to new housing from a yet-to-be-determined date after the next election.
All investments made before this date will not be affected by this change and will be fully grandfathered.
“(If Labor wins) they won’t necessarily put negative gearing on the agenda immediately though,” Ms Pilkington said.
Therefore, Ms Pilkington believed the first half of 2019 “is going to be a really good time to buy”.
“Nothing really happens of any significance in the real estate market in the lead-up to an election.
“So what I think is likely to happen is the market will come back a little bit further, and once the (NSW and federal) elections have both passed, that’s when people are likely to start getting serious again.
“I think if people are trying to pick the bottom of the market, they really need to be looking at buying in the first half of 2019.”
However, the Australian Financial Review’s Phillip Coorey recently suggested the timing of the next federal election means investors could have longer than anticipated before Labor’s proposed cuts to negative gearing and capital gains tax breaks can start.
He said due to the government's decision to hand down a federal budget on April 2, Labor, if it won government, would face a difficult task to legislate the changes before the start of the financial year.