Whilst property markets closely watch what can directly influence market sentiment in 2016 we should be watching very closely what will indirectly affect the market and just how big these influences may be.
I can nominate six such influences that I believe will have significant repercussions on how we should be approaching the markets.
1. ILLEGAL PROPERTY ACQUISITIONS
I find this topic quite fascinating given I have always been of the belief that this practice is (or was) huge and I have not changed my opinion. In May, 2015 the then treasurer Joe Hockey set aside 60 investigators from the Australian Taxation Office (ATO) stating that from their initial investigations “they are just at the tip of the iceberg.”
Fast forward seven months where this week the ATO announced that it was now investigating an estimated 31 million records from 1985 to 2015. This order applies to all states and territories for not only sales transactions but also all rental agreements, landlords, weekly rents, length of lease and rental bonds. The biggest investigation into Australian real estate since 1993 when the ATO moved records to computer technologies and every real estate agency in Australia was forced into providing every transaction record.
So from this point forward I’m going to call this the “Please Explain Inquiry” given the ATO obviously believes that they have uncovered interesting irregularities.
It should also be noted that the Department for Rip Van Winkle otherwise known as the Foreign Investment Review Board (FIRB) have just appointed former ASIO director, general David Irvine, to the board. Two very big announcements in the space of a week – watch for some big announcements in 2016.
2. UNDERQUOTING REFORMS IN NSW
Not before time from 1 January 2016 real estate agents must quote the likely selling price at the figure(s) that appear on the Agency Agreement. The fines and penalties for failure to do so are severe. The NSW Government Office of Fair Trading will be out in force next year policing their prized new legislation that is a major win for consumers and ethical agents. This will also cause major problems for the habitual agents who love nothing more than buying listings through valuing properties at ridiculous prices. . Expect to see plenty of naming and shaming in 2016.
3. OFF – THE – PLAN PURCHASES
It would be an understatement to suggest that investors are not skittish and squirming about their recent property acquisitions. What remains to be seen is how many pull the plug and walk – away from their purchases believing that Sydney’s apartment investment markets are facing a massive correction in 2016.
Again the NSW government has been busy rushing through more property legislation stopping developers cancelling existing contracts – sunset clauses, because the apartment prices have increased significantly. That loophole has been now shut for good.
4. COUNCIL MERGERS
An announcement regarding the mergers is just days away although I am reliably advised that Mosman will not be forced into a merge and will stand alone. Having said that it will lose all powers regarding new apartment development approvals and this now will be handled by the state government.
5. 2016 FEDERAL ELECTION
They say that the Melbourne Cup stops the nation – well a federal election can stop the real estate markets. We can expect to hear plenty in 2016 about what’s now off the table and what’s now on the table. Two words will play a massive part and I’m not talking about negative gearing. No tax reform will be the keywords in 2016 although at this stage its anyone’s guess to what extent and just what lengths the Turnbull government will go. Whatever the case this will be a major distraction in 2016 where I’d love a dollar every time I hear the words Goods & Services tax – GST.
This now leads me to the very big X Factor for 2016.
6. X FACTOR
The premier must have been reading my blogs with a new report from the NRMA confirming that planning is in the early stages to see a rail line from Sydney’s northern beaches through Mosman to Cremorne and Neutral Bay to the Sydney CBD.
The other key recommendation is for a tunnel under the Spit Bridge connecting with Seaforth and the Warringah Freeway linking up with the new harbour tunnel which eventually will connect to the WestConnex.
The report stated – “For decades, the northern beaches and the lower north shore has been the Bermuda triangle of transport infrastructure, where plans have come and gone to disappear without a trace.” It then went on to say “The chronic neglect has left our roads badly congested and buses at or over capacity. We believe the government must now take this opportunity to put the region back on the agenda as part of its overall drive to improve infrastructure across Sydney.”
The report revealed that Spit Road and Military Road were two of the worst in Sydney with higher traffic than Parramatta Road. On an average weekday, 70,000 vehicles use the Spit Bridge, 80,000 use Military Road and approximately 64,000 use Parramatta Road at Camperdown.
So you can expect to see high rise along Military Road and even more high density around the new suburb train stations.
Thank you for joining us in 2015 and we will be back with Virtual Realty News in 2016 – our 16th year. From all of us at Richardson & Wrench Mosman/Neutral Bay we wish you a very Merry Christmas and a safe and happy New Year.