Buying and selling property to take a back seat during election

Buyers and sellers are voting with their feet in the run-up to the federal election, and choosing to back off from the real estate market.

Agents across Sydney are reporting a sudden drop in the levels of activity by both purchasers and vendors, postponing their decisions until after the July 2 election.

“I think there’s so much uncertainty at the moment about negative gearing and super, and who might win the election and what will happen afterwards as a result,” said BresicWhitney agent Di Grundy.

“It’s now such a close show, people want to see how things will turn out, so it’s become a time of wait-and-see.”

Investors particularly were being hit by doubts about negative gearing and super rules, said Rosemary Johnstone, of the independent research and lobby group Property Investors Association of Australia.

“There could be changes whichever side wins the election, so people are feeling fairly uncertain at the moment,” she said. “Everyone’s now talking about how quiet it is and it’s going to be quiet now until the election is over and everything becomes clearer.

“A lot of investors’ concepts about investing are fairly wobbly, so it doesn’t take much to push them over the edge.”

Those searching for homes to live in are also having second thoughts about buying now. Hospitality worker Josh Sansom, 24, has been looking for an apartment to buy so he can move out of his rented unit in Kings Cross. Now he’s decided to hang on to see what the election brings.

“You’re just never sure what’s going to happen next,” said Mr Sansom, who works in his local Uliveto Café. “The outcome of the election might affect prices and if investors drop out, it might make it easier for owner-occupier buyers.

“You just feel that everything’s up in the air with an election, so it’s safer to hang on and see what happens first.”

The election’s having a similar impact on sellers. There were 495 auctions in Sydney on Saturday, down from from 523 last week – and a 15 per cent drop from this time last year.

Alex Lambros, director of LJ Hooker Home Loans, said the lack of supply of properties was affecting the whole market. “To sell a property involves a lot of preparation and planning, and with people not sure whether they’ll be able to negatively gear or not, they’re saying they won’t sell until they know,” Mr Lambros said.

“Then they’re further stalling because there’s not much out there for them to buy themselves, so the market becomes a stalemate. They think they won’t move until another vendor moves, and then no one moves. Even after the election, it might not pick up; people might then want to wait until after winter.”

But agents of Sydney’s top-end properties are not seeing any drop in demand. If anything the market is picking up.

In Tamarama on Saturday five groups registered to bid for an unrenovated semi with ocean views that sold for $3.85 million, $250,000 more than the reserve.

Selling agent Debbie Donnelley of Phillips Pantzer Donnelley said while there were few properties for sale in Tamarama at the moment this was not because of the election.

“People are not holding off on selling to see whether it is Labor or Liberal in the eastern beaches, because they don’t see it as being any different with either one in government,” she said. “The big impact at the moment is the record low interest rates are motivating buyers.”

Michael Pallier of Sydney Sotheby’s International Realty said that shortage of high-end homes was now starting to lure more vendors into that market. “With the dollar low and clearance rates high, people seem to be more willing to sell ahead of the election,” he says.

with Camille Bianchi