With the royal commission mostly behind us, the banks will respond by making finance more readily available to first home buyers and investors, and a steadier flow of funding will help get some real estate markets moving again after a couple of challenging years, says Angus Raine, executive chairman, Raine & Horne.
“The grey cloud of the royal commission will dissipate in 2019,” he told REB.
In particular, the executive chairman expects Perth and Darwin to rebound.
“Some capital city markets such as Perth and Darwin will continue to rally in 2019 thanks to more natural lending conditions, continuing low interest rates and price affordability compared to the significant southern capitals,” Mr Raine said.
Mr Raine also anticipates more mortgage competition in 2019.
“I expect more consumers will continue to shop around for cheaper mortgages. This competition will see a flight of business to the second-tier and non-bank lenders.”
Also in 2019, Mr Raine said that he hopes to see attacks on negative gearing end.
“That said, if Labor wins the 2019 election, then it will be the end of negative gearing for established properties. This result is unnecessary as it’s well documented that tighter bank lending has already taken some steam out of the market.
“Once the banks remove the shackles from their loan books as expected in 2019, first home buyers, who Labor purports to be defending with its negative gearing policies, are well placed to take advantage of lower interest rates and improved real estate affordability.
“Don’t forget that when Labor scrapped negative gearing in 1985, the bottom fell out of the market. This crashing consequence will happen again and leave millions of hardworking Australians worse off for their troubles.”
Mr Raine said that he’d like to see real estate regarded as a professional career in the future — along the lines of financial planning and mortgage broking.
Therefore, he supports the decision to reduce the numbers of real estate licence categories from six to three in 2019.
“This will make it more demanding to practise as a real estate agent,” he said.
“From early next year, three licences will cover real estate, strata, and stock and station services. A real estate licence will cover qualifications for buyer’s agents, on-site residential property agents and business agents. Previously, these were standalone qualifications.”
Moreover, Mr Raine said that there will be rankings attached to each licence type based on an agent’s level of experience.
“For example, new entrants must pass a ‘Certificate of Registration’ that comes with heightened entry requirements. These additional requirements involve completing seven modules rather than three.
“The next ranking is ‘Agent’, a licence which is gained once a professional has achieved more education and industry experience. The final step is ‘Licensee in Charge’ and will cover operators of a real estate, stock and station or a strata management agency.”
He said that there is good logic in this.
“The reason I want to see the new licensing order in place is because industry entrants can perform the same functions as experienced agents. Additionally, the new licensing arrangements will provide a career pathway for industry practitioners,” the executive chairman said.