In the lead up to an election, each major party makes plenty of promises. Property ownership, housing affordability, and personal finances are always front and centre of the debate, and this year’s NSW State election is no different.
After a boom in property values, rising interest rates and cost of living increases, it’s only natural the people of NSW are keen to dig a little deeper to see what both parties are bringing to the table.
We sat down with Landen’s Head of Property, Shane Harding and Head of Wealth, Malcolm Strain to talk about what life might look like if either the Liberals regain power in NSW or the baton gets passed onto Labor.
Shane Harding, Head of Property at Landen
The election could have significant impacts on the property market, particularly for off-the-plan purchasers, however the timing and implementation of policies are key.
Their proposed policies related to planning and zoning regulations, as well as investment in regional communities and infrastructure, could impact the supply of new properties and potentially benefit off-the-plan purchasers.
The coalition’s investment in critical infrastructure, key worker housing, and regional housing development could lead to an increased supply of new properties, especially in regional areas, another bonus for buyers.
A focus on rezoning to deliver more homes to market will be yet another good sign for the supply of new properties and in the end, offer more choice for buyers.
Overall, the NSW government’s initiatives will bring more competitive and affordable prices, offer wider options, improve living conditions and amenities in areas where new properties are being built.
Their plans, especially around stamp duty, will also make purchasing more affordable for first-home buyers and ultimately impact off-the-plan purchasers in a positive way. However, the exact impact will depend on the specific details of the policies and how they are implemented.
Some of Labor’s policies, such as the abolition of stamp duty for first-home buyers (although capped) and the investment in build-to-rent housing could also benefit buyers, however all the details of these policies (and how they’ll be implemented) are not yet clear.
Proposed changes to government agencies (also by Labor) and the introduction of new policies for renters may have direct implications for investors and indirectly impact purchasers.
Labor is also proposing to amalgamate government agencies – often a time-consuming task – as well as policies related to stamp duty, renters, and affordable housing. An amalgamation of departments could delay policy implementation.
Malcolm Strain, Head of Wealth at Landen
The outcome of the election could affect the direction we take at Landen Wealth in the short to long term future because a focus on affordable housing over time may impact our offerings.
However, with affordability and interest rates as they currently are, along with market uncertainty, we’ll continue our plan to deliver completed properties as a portion of our property sales in conjunction with our off-the-plan sales.
Our funds will also look to provide more regular income, with monthly options rather than annual interest payments.
Although we don’t anticipate any changes in regulation or taxation policies would directly impact investors’ ability to create wealth or change their investment strategies, what happens with interest rates and inflation will drive people’s individual decision-making.
Once we know the election results, and see what policies actually become post-election realities, then the Landen Wealth team will know when the time is right to adjust our recommended investment strategies.
I believe there is very little in the Coalition’s election promises that address the underlying factors impacting inflation and the cost of living.
Ideas that help promote business, and make it easier to do business, will have an impact on the economy, and employment and therefore drive longer term growth. I also believe their policies which will improve access to childcare, as well as a move to cleaner energy are steps in the right direction.
Landen Wealth is all about building financial security so the Liberals’ proposal of a “future fund” for children, that families can contribute to, will hopefully encouraging savings from a young age and improve fiscal responsibility.
While I think the impact will be minimal, if children are involved and can see their money grow, the scheme may benefit future generations. The right limitations are important though, to avoid the plan being rorted.
I believe privatisation is a difficult topic as it comes down to whether you believe the Government is better at spending money wisely (from the proceeds of a sale) or better at running a business (the asset looking to be privatised). And whether a private business can run things better, achieve a profit and pass on savings for consumers, or will simply retain profits and increase costs? A privatised business, managed by a set of rules to prevent excess profit gouging might be better for consumers and free up resources for the government to spend on other necessary services.
Policies that promote affordable housing may influence investor behaviour to invest in that supply, subject to the investors’ intentions – if they desire to build and sell rather than build and hold. Policies that reduce an owners’ control of their investment or reduce their rights, may make the asset class less attractive, and undermine the government’s attempts to increase supply.
What the parties are offering
Under the Liberals
The First Home Buyer Choice subsidy scheme, which came into effect in January this year, will be expanded to eligible second home buyers. If they retain power, first and second home buyers can choose to either pay stamp duty (also known as transfer duty) or an ongoing land tax of $400 plus 0.3 per cent of the land value each year. As it stands, the purchase price must be less than $1.5 million.
The party has promised a ban on rent bidding in an effort to curb the rapid rise in asking rents, as well as a proposed $2.8 billion housing package to fast-track critical infrastructure, planning proposals and rezoning. In addition, there will be the provision of key worker housing, especially in regional communities where the aim is to provide an estimated 127,000 new homes over 10 years with a focus on teachers and police.
The current State Government is also providing assistance to local councils in order to push through a backlog of planning proposals and development applications under a scheme they’ve labelled Unblocking Homes. Rezoning land for residential use is another policy point with plans to deliver an additional 70,000 homes to NSW in a decade.
The Liberals also announced a new emissions reduction target of 70 per cent by 2035.
In a bid to make government more efficient, the opposition plans to merge the Land and Housing Corporation, the Aboriginal Housing Office and the Department of Community and Justice (Housing) into a new department they’d call Homes NSW under the Minister for Planning.
Keen to address the much-maligned stamp duty tax, Labor wants to abolish it altogether for first-home buyers purchasing under $800,000 and then implement a concessional rate for homes between $800,000 and $1 million. However, Labor plans on getting rid of the current government’s First Home Buyer Choice scheme.
To help pet owners who rent, Labor also wants to introduce changes that would give owners three weeks to provide legitimate reasons why they won’t accept an animal in their investment property. In another attempt to help renters, they are proposing a portable bond scheme for renters.
NSW Labor also plans to mandate 30 per cent of housing on surplus government land must be turned into social, affordable or universal housing and wants to spend $30 million on a build-to-rent housing scheme on the South Coast.
The 2023 State election of the 58th Parliament of NSW is to be held on Saturday, 25 March. We can only wait until then for the outcome and what the elected parties will deliver.
Learn more about this election on the NSW Electoral Commission website.