We've got a Challenging 4-5 Weeks Ahead 🗞️ Real Estate Market Wrap

• 00:00 - New developments will be the new favourite, why?...
• 02:42 - If you can only Negative Gear 2 properties - THIS will happen with prices
• 04:12 - The next 4-5 weeks will define the real estate market for years to come

My Clearance Rate: 8/13 SOLD

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Budget Signals Favour New Builds

Tom Panos 0:00

Based on what the government is saying for the budget in May, new properties are going to become the flavor of the month. If new properties you're going to be able to negative gear those, if new properties you're going to be able to uh have better tax concessions, because that's what they're suggesting, and I know why they're doing it, because they want to create demand for new developments. Because if they create demand for new developments, then developers are going to buy them and buyers will pay good prices for them, right? So what you're going to see, it's a bit like a monopoly board at the moment. What the government is trying to do is move buyers away from demanding like existing homes that are going crazy and move them to new type properties. And uh I think they've got smart people modeling that.

Why Supply Takes Years To Land

Tom Panos 0:46

What they haven't probably worked out is that by the time that they have the budget, sign off on it, do all that stuff, it's years before anything happens. And if they're taxing properties, it takes three, four years to get properties off the ground and up finished, right? It's not going to happen straight away. And in those three, four years, oh man, it's going to be like 1985 to 1987 for tenants where rents went

The Rent Squeeze Warning From 1987

Tom Panos 1:14

up. Like I did a post on it today. Go do it. 1985 to 1987, rents went up so high that the government did a backflip, I think, in the middle of 1987, and returned to negative gearing and started giving capital gains discounts because tenants were being absolutely suffocated. Absolutely suffocated.

Why Future Price Growth Could Slow

Tom Panos 1:36

So all I've got to say to you is that one thing that is probably a positive is for many, many buyers, I do expect in the years to come, the rate of growth, the rate of growth that property has had is going to be lower. And when people say to me, Tom, but why with the migration and you know, like the lucky country, et cetera, et cetera, think about it. If you can only negative gear two properties, it means for all properties after that, when you go to the bank, your cash flow situation from property three onwards is not going to look great because you'll be copying all the losses, which means then the bank, when they assess you, they will give you less money, which will mean that buyers have less money to offer on these properties. So that will impact prices.

The Negative Gearing Cap And Lending

Tom Panos 2:32

End of story. But where I think there'll be a few winners is properties that can give you lots of rent but are considered one property. Example, a block of units. Example, uh a boarding house, right? Where you might have 20 tenants paying you, right? But the government will probably see that as just being one property. They're going to be the winners. New developments are going to be the winners. As I said earlier on this morning in one of my posts, don't be surprised if all of

Properties That Win Under New Rules

Tom Panos 3:02

a sudden duplics have lost uh attractiveness in the last six months. I wouldn't be surprised if they become attractive again.

What’s Selling Now And Why

Tom Panos 3:10

At the moment, it's very clear to me the two types of properties that are selling are properties that are A-grade, like the one I just did in Punch Bowl, beautiful condition, basically new, right? Turnkey properties, none of these ones that you're gonna have to run off to council and get approvals and organise builders and all the stuff to do with renovation. They're not the flavor of the month. Um, in addition to that, lower price point, and any property that a mo vendor is motivated, always agents consider a good listing because they're sort of, you know, the price gets buyers excited.

Big Four Weeks And Travel Plans

Tom Panos 3:45

However, I've got to say to you, we have a very, very, very big four to five weeks coming up. We've got interest rates, we've got um the budget, we've got Anzac Day this Saturday, and I'm letting you know, I'm packing is I'm going to Queenstown tomorrow. Auckland, Christchurch, my week's in New Zealand. I was supposed to be in Dubai, obviously that's been changed. It was a conference week in Dubai, the conference week now has moved to New Zealand.