The 18th May 2019 will go down in history as a pivotal moment on our property cycle clock in my opinion and whilst we won’t have concrete numbers on that opinion for the next 6 months or so, I could almost guarantee you that will mark Townsville’s turning point and pathway to a genuine recovery in our property market.  The federal election showed more than ever that the health of the economy still remains central to politics and with not only our region doing it very tough now for 3-4 years so too has many parts of regional Queesland from the coastline to out west where our poor farmers have not only been battling tough market conditions but also crippling drought.  You can also bet the State Government was watching very closely and we have all seen their farcical about face on the proposed Adani mine.  Whilst controversial in itself and not the subject of this column, the great thing for Townsville and regional Queensland is our State Government will be doing all they can with whatever resources they have at their disposal to win back Queensland before the next state election in 18 months time, and that my friends can only be a good thing for Townsville and our economy.

So the prospect of significant taxation policy changes plus removal of negative gearing and the reduction in Capital Gains Tax (CGT) that were proposed by the Labor party, wasn’t something Queenslanders were prepared to take a chance on and opted for stability of government instead.  The day after the election the entire real estate industry breathed a collective sigh of relief so too did landlords, mortgage holders and tenants.  We also saw a significant announcement by the Australian Prudential Regulation Authority (APRA) just following the election that they are proposing amending their guidance on mortgage lending with the view to relaxing serviceability.

This announcement along with recent relaxations by some of the major lenders on the previous rigid policy on not taking on interest only loans for investment properties (a result of the banking Royal Commission) is another barrier removed for home buyers old and new which can only further stimulate buying conditions.  So with a combination of the property sector not having key incentives removed or altered (negative gearing and CGT reduction) and more favourable lending conditions Townsville is primed for a turnaround and in a big way in my view.  External demand for real estate from investors has already started since the election and this will continue over the coming 12-18 months which will put pressure on the local house hunters to get involved.  In time and with enough of this demand we should see prices start to rise and home owners start to claw back the lost ground endured over this past 5-10 years.

Time will tell but the writing is certainly on the wall.

By Damien Keyes

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