How the federal election will affect Melburnians at home

Melbourne’s property market will plunge further if Labor wins next month’s federal election, industry players say. But rising rents and more people heading to the outer ‘burbs is inevitable no matter who wins.

Melbourne’s struggling property market could plunge further if Labor wins next month’s federal election, experts warn.

But rising rents and more people heading to the outer suburbs seems inevitable no matter which party wins.

Property experts have universally panned federal Labor plans to fiddle with negative gearing and capital gains tax, which they claim would exacerbate rental price rises and potentially prompt a post-election surge in investors off-loading homes before changes take effect in January.

Real Estate Institute of Victoria vice president Adam Docking said while extreme falls in Melbourne’s house prices seemed over, a change of government could trigger a “cascade” of fresh reductions.

“I’d hate to see voting based on class warfare without really thinking about the stakes,” Mr Docking said.

First-time buyers are keenly anticipating the results of the May 18 poll amid hope it could cull competition from investors.

Sebastian Gomez and partner Kelly Achkar, who are looking to buy for the first time, believe Labor’s changes would be their ticket to finally breaking out of the rental market.

“We have been checking the market for years, but the over inflated prices in the last few years didn’t give us the trust or opportunity to enter the market,” Mr Gomez said.

“We really would like to buy something simple and enough for us and our future … it is better to invest our income in our own place than paying someone else’s mortgage.”

As well as scaling back negative gearing, Labor has promised to increase capital gains tax for investment properties if elected.

Loan Market director and broker Josh Bartlett said the tax changes could drive a post-election surge in investors looking to offload homes.

It could reduce the number of rental properties while negative gearing changes to start on January 1 could prompt investors to raise rents to make up the shortfall from lost tax benefits.

Joshua Summers recently acquired his first negatively-geared investment property and is watching the election closely as he hopes to expand his portfolio.

“I’m a carpenter by trade, so buying and renovating is a natural transition, and to take something that’s almost derelict and transform it into someone’s childhood home is nice too,” Mr Summers said.

“I still see property investment as a good option, property prices are always going to rise long-term — but it would make it harder in the short term.”

The Coalition has pledged to leave the property tax system unchanged with experts believing the stability would help stem house price falls.

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