It seems Albo doesn’t know the real estate market as well as he thinks he does.
ANALYSIS
Since the federal budget, Prime Minister Anthony Albanese has been extolling the prospects for younger buyers at auctions as he seeks to overhaul capital gains tax discounting and negative gearing to deter investors from buying established property.
“If a young person is going to an auction today, unlike last week, the investor who is bidding against someone who wants to live in that home as their first home won’t have the taxpayer by their side subsidising their bids,” he said.
“We know over a long period of time, that if you have the previous system of negative gearing for existing homes, then someone can perhaps, if they’re in a contest,
go that extra little bit further, bid that extra $50,000, because they know that will be a deduction for them.”
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Auctions generally aren’t a great place for first home buyers. Picture Daily Telegraph / Monique Harmer
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It’s apparently all about “levelling up the playing field.”
But the PM fails to understand auctions are almost never a fair playing field. Especially in Sydney.
My view is that first-home buyers (FHB) should only rarely attend auctions, which are about selling prices going up and at above guidance (though that’s a challenge in the current market with increased interest rates and reduced borrowing capacity).
Auctions are emotional webs, when often first timers get more emotional than the calculator crunching investors.
THEY ARE KIDDING
It is within the private treaty market that first-timers should mostly seek homes available for sale at less than the asking price. The PM, Treasurer Jim Chalmers and Housing Minister Clare O’Neil are kidding first-timers into thinking auctions are now for them.
Data is essential for an informed understanding of the auction market. For a long while the Ray White group issued weekly national auction investor buyer numbers after directly asking buyers about their intention. It regretfully ceased its weekly Competition Creators publication.
I had PropTrack look at the recent median prices across the major capital cities, in the quarter ending April. That ought to be a warning for FHBs turning up.
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Prime Minister Anthony Albanese, Treasurer Jim Chalmers, Minister for Housing Clare O’Neil and Member for Canberra Alicia Payne hold a press conference in Kingston, Canberra. Picture: The Daily Telegraph / Martin Ollman
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The Sydney median auction house price sat at $2.22m, well above its $1.62m overall house median.
Sydney’s median auction apartment price sat at $1,245,000, well above the $892,000 overall apartment median. These are huge gaps: $602,000 higher (37 per cent) for houses and $353,000 higher (39 per cent) for apartments.
Melbourne auction outcomes are also dearer than its overall median prices: $1.17m for houses and $810,500 for apartments, against the overall $1m and $629,000.
Canberra sees an overall $1.02m house median and a $602,000 apartment median, with its auctions higher at $1.13m and $777,500.
Brisbane had a narrower gap at $1.45m for its auction house median and $882,000 for apartments, versus $1.23m and $861,000 overall.
Adelaide had the sanest, most affordable auction market with $1.01m for houses, and $730,000 for apartments, against $1.02m and $700,000 overall.
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