Watching Leigh Sales get stuck into Federal Treasurers after their budget is delivered is always entertaining, but because of this years’ big spending, socially sensitive flavoured budget, Josh Frydenberg got off lightly. Could now be the right time to invest in Fremantle?
Housing featured quite a bit. The First Home Loan Deposit Scheme was expanded delivering an additional 20,000 new places for single parents and others whereby the government underwrite borrowers with small deposits (as low as 2 percent) to get into their own homes. First home buyers can now dip deeper into their superannuation too, taking up to $50,000 (up from the existing $30,000 cap) out to fund a home purchase.
All up, the feds have committed $782m in housing-related schemes including some important assistance for homelessness services and affordable housing initiatives.
Importantly, unlike Labor’s current policy, there are no changes proposed for negative gearing or Capital Gains Tax settings for property. It’s important because there is a severe shortage in affordable rental homes in many parts of Australia and changes to tax laws that disincentivise mum and dad investors to buy properties would significantly add to the problem.
Supply of rental housing goes to the heart of the affordable rents issue; everything else is just tinkering at the edges. There are only 2870 homes listed to rent throughout the metro area compared to 5425 this time last year. By contrast, there were more than 12,000 advertised in January 2018.
In WA, the potent combination of subdued investor activity for several years, massive foreign investment taxes, flat yields, a mismanaged Rental Moratorium and capital value losses since 2014 along with strong repatriation demand from West Australians has moved our vacancy rate to under one percent.
These savagely low vacancy rates are driving up rents as tenants desperately compete to secure a home in a market starved of supply.
Property investors remain spooked, making up only 17 percent of all buyers, well below the long-term average. Yet, ironically, now is the best time to buy local real estate.
WA’s economy is surging, jobs growth is strong, we’re pretty much COVID-19 free, property values are rapidly rising (Perth’s median has gone from $475,000 to $508,000 in nine months), rents are climbing and bank finance has never been more affordable. I cannot recall another economic environment where all indicators so firmly pointed to ‘buy’.
Fremantle’s median house price is unchanged in a decade at $781,000. It won’t stay there for very long. Now is the time to invest in Fremantle.
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