For many people, purchase decisions prior to the budget are fraught with uncertainty. Yes, there might be changes coming with the budget, however those changes would only impact purchases that occur after the budget comes out. Most certainly, there are also changes to lending, and in terms of lending, people are much better purchasing now than down the track when those changes come into effect: http://www.reinsw.com.au/Web/Posts/Latest_News/201704/APRA_tightens_lending_rules.aspx. The push is for a 20% deposit for investors, and for the loans to be principal and interest, rather than interest only. This will certainly impact the investor market, however the investor market does not drive property prices: it is home owners that drive the prices because they are more emotional buyers who are willing to pay more for the property they love, whereas an investor puts a rational $ cap on the purchase price and walks away after that point.
With the budgetary changes, they will apply all over Australia, not just Sydney. If the market takes a hit, Sydney is better protected than any other City, and has always re-bounded and risen within a full property cycle (7-10 years). In the current market, an Eastern Suburbs purchase is recommended as there is always strong demand for rental properties in the east, regardless of what the market conditions are like for buyers; in fact, the harder it is to purchase, the stronger the demand for rental properties, and if interest rates increase gradually, so too will the rents. In terms of the purchase price, where people are concerned about potentially over-paying today as compared with after the budget comes out – these sorts of fluctuations do even out over the longer-term (7-10 years).
In summary, on the one hand, yes the budget will likely bring changes, however the lending policies concern me more as it’s harder for people to get a 20% deposit, whereas they’d more easily forego say negative gearing in a rising market (I don’t believe prices will fall). The option that some consider is investing in shares which are more liquid than property, but over-all, property out-performs shares in the long-run.
Melissa Maimann is a licensed Buyer's Agent in Sydney. She assists home owners and investors alike. If you would like a confidential discussion about purchasing your next home or investment, don't hesitate to make contact.