WIth the recent announcement of the Federal Election which will see Julia Gillard, the first ‘unelected’ female Prime Minister up against the budgie smuggler wearing Tony Abbott, it is interesting to analyse the effect this has on the housing market.Historically, once an election is announced the housing market seems to go into a state of ‘suspended animation’ as potential homebuyers get nervous about what the future will hold for interest rates, government policy and in general the flow through effect on housing prices.
Firstly lets address interest rates. Successive Reserve Bank Governors and Glenn Stevens is no exception, have gone to great lengths to emphasise that RBA interest rate policy is apolitical, ie it is not influenced by political agendas, policy, election promises and certainly not influenced by grandstanding by a government that decries it’s economic credentials against interest rates. John Howard found that out the hard way in the last Federal Election when the RBA raised interest rates just days before the Federal Election, which saw some commentators state that the Election was lost on that basis.
And now we have a Labor Government saying that interest rates are lower under their regime than a Liberal Government. Comments like this really stink and are nothing more than political rhetoric. It is pure coincidence that interest rates dropped so dramatically shortly after Kevin Rudd came to power. The RBA had to move to lower interest rates to keep the Australian Economy stable at a time when the larger Global Economy was in turmoil. Certainly central banks around the world were doing exactly the same thing and for the Rudd government to claim credit for the dramatic drop in interest rates is nothing more than political spin and ‘bullshit’. The fact is, no matter who was in power at the time, the RBA would have made the same decisions. So don’t for one minute be fooled by that political ‘spin’.
But, as the great Warren Buffet continually states ‘Be fearful when others are greedy and be greedy when others are fearful’ now is an ideal time to negotiate HARD on property. Now is the time to pounce and if you are an astute and hard negotiator you could potentially secure a great deal in the property market. The vast majority of investors which I call the ‘herd’ are off property at the moment pending the outcome of the election and yet, at the same time there are a whole bunch of vendors out there who are trying to sell their properties.
The lead up time to an election is definitely a buyers market so go in hard and ‘low ball’ any offers you make. Again, apply the old principle of you can raise your initial offer but you can’t lower your offer. And with a lack of buyers in the market in what I call this ‘golden period’ agents are going to cling to and try to nurture every serious offer that is put on a property.
But beware, on the other side of the election, when whoever is the winner and they are in their post election honeymoon period and therefore can politically do no wrong the balance of power will move back to the vendors and it will be ever harder to secure a contract at a favorable price.
So, if you are in the market for property at the moment, now is the time to pounce. Go in hard, go in low but also make sure you go in serious.
Good luck with your property negotiations and remember ‘the deal of the century comes along at least once a month’
Filed under: Australian Economy, Finance Tips, Federal Election, housing, interest rates, Real Estate
