Mark Bouris says election result will boost property market

Millionaire businessman Mark Bouris says the federal election result will bring about a collective sigh of relief among property owners.

OPINION

The morning after any election is always the same: half the country jumps for joy, the other half weeps into their cereal. But no matter which side you landed on, come Sunday morning, there is one giant group of Australians who should be collectively sighing in relief.

That group is Australia’s property owners — and that’s about two-thirds of us, a number that’s growing all the time — who can now sleep a little easier knowing that their single biggest asset has the best possible chance of now stabilising, or, with a little luck, even rallying.

A Labor government would have neutralised the regulatory management put in place over the past four years to manage the long-term health of the property market. The proposed negative gearing and capital gains tax changes would have compromised, or at least complicated, that process.

That negative gearing will remain a plank of this country’s wealth building platform is good news for owners and renters alike, but it’s also not just government policy that is making a difference here.

If the returned government is the captain of the ship, then they’ve rightly set a steady-as-she-goes course through what have been rough seas for the Australian property market.

But while all of that’s been happening above deck, it’s in the engine room where some important changes have been made that have the best chance of getting the market moving in the right direction again.

Yellow Brick Road executive chairman Mark Bouris. Picture: Hollie Adams/The Australian

Both the Reserve Bank and the Australian Prudential Regulation Authority (APRA) have been working hand in hand, and they’ve done a great job in managing the property asset class.

APRA made moves last week to scrap the 7 per cent interest rate assessment (which was actually 7.25 per cent in real terms), a policy introduced in 2014 to curb the amount Australians could borrow in the face of then rapidly rising house prices. The idea was simple enough; regardless of a borrower’s actual agreement, lenders had to assess their ability to repay their loan at a much higher interest rate as a kind of insurance against predicted rate rises.

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But the economy looks very different today to how it appeared in 2014. Since then, interest rates have plummeted. The cash rate now sits at 1.5 per cent, and most mortgage holders are paying less than 4.0 per cent on their mortgages, meaning banks were forced to assess borrowers against a make-believe rate that had absolutely no relation to the real-world figures.

The short answer? Australians will now have better access to money, and can step onto the property ladder far more easily.

Now, combine that with the news that the RBA is seriously considering another interest rate cut, and the outlook for Australia’s property market is suddenly looking far more rosy than it was even a week ago.

I think that a future in which the property market stabilises and then bounces back is now visible on the horizon. And for once, the government and its relevant agencies are all taking the right steps to ensure that it happens.

Because yes, the seas have been rough, but the ship carrying our most precious cargo — our hopes and dreams of property ownership — will now keep right on sailing.

Mark Bouris is an Australian businessman and the founder of Mentored.com.au, which gives online access to Australia’s greatest business minds | @markbouris