Tim Lawless, research director from Corelogic has stated that their index had reported a 1.6% rise across the capital city index over the month of May. Whilst this figure is slightly lower than that for April, which was up 1.7%, there were still very strong results being achieved and a re-acceleration in the trend rate of growth. This was also felt in other parts of Australia including Illawarra which saw real estate sales in Illawarra rise.

We were experiencing a market where mortgage rates were low, and expected to become lower, which has a positive effect on buying, however there was an election on the horizon. Generally with an upcoming election we saw a slowing down of activity and growth with buyers holding off to wait and see the results from the polls, however the reported figures were showing that investor activity was on the rise as well as valuation numbers on the increase.

The speculation was that the increase in investor activity was a result of investors rushing to the market to beat any changes to the negative gearing laws that had come into effect after the election. Was this a fair assessment? Others asked. Regardless, this still saw real estate sales in Illawarra spike.

The proposed changes to the negative gearing laws would be implemented by Labour, should they have won the election. In that case they would not take effect until July 2017. So given that we didn’t yet know the result of the election, and the fact that even if Labor won it would be another 12 months before the new changes took effect, is it reasonable to say that this is the reason real estate sales in Illawarra increased? I would think it’s questionable.

However, having said that, there was still an uplift in investment being experienced in the market which may have been due to the opening up of more favourable lending conditions with lenders more willing to lend to investors then because they were well under the 10 per cent speed limit on annual investment growth imposed by the Australian Prudential Regulation Authority (APRA) in December 2014.

Lenders under the 10 per cent growth limit were using what remained of their quota to offer better terms and bigger discounts than competitors exceeding the limit and unwilling to clamp down on their current offerings.

But how long will it last?

The second half of the year was expected to see a slow-down in the growth trend, given that yields were very low in the Australian housing market at that time, affordability was becoming a big issue, particularly in Sydney and Melbourne, as well as lending conditions had become tighter than they were 12 months before that, meaning it was a little harder to get a loan and the size of the deposit required was larger in some instances. This surely contributed to real estate sales in Illawarra increasing.

If you had been considering selling but wanted to wait until the result of the election thinking there were low levels of buyer activity, it may have been worth bucking the trend. With the then stock levels in Sydney fairly tight and the buyer activity levels on the rise, you may have wanted to consider marketing your home for sale then to take advantage of favourable selling conditions.