Australia's Top 10 Property Players: SQM

The property market may well be one of the most talked about asset classes in Australia, a cyclical market which SQM research says is influenced by key individuals wielding the power to impact housing prices this year, and next.

SQM Research has compiled a list of top ten people who can impact either the level of demand or supply of property and sentiment in Australia.

And as we embark on 2019 territory, head of SQM Research Louis Christopher says there are multiple scenarios that could play out in the nation’s property sector, each of these 10 people will have their influence on the events.

“The 10 will have an influence on 2019. Let's hope it is to the good of the community and not to its demise,” Christopher said.

He’s CEO of Australia’s largest residential property development company, with strong views on housing and taxation policy.

Changes to negative gearing has been supported by Steinert, who Christopher says has much to gain if Labor wins the election.

“Last year, Steinert argued for curbs to negative gearing, in de facto support of Labor’s policy to curb concessions,” Christopher said.

“Abolishing negative gearing on established homes could be a boon for developers of new properties, which would put Mark and his company in a box seat.

“So as the election gets closer to the day, we expect Mark to be advocating with force.”

Stocklands has a combined development pipeline of more than 82,000 residential lots and 3000 retirement units in key growth corridors.

With negative gearing a key election issue for 2019, should Shorten win the election next year, Christopher says this could change.

"His threat to disallow negative gearing on established homes and reduce capital gains tax concessions is what puts the opposition leader in the number nine spot," he said.

Christopher says any change to the negative gearing rules would significantly cut demand for investment properties and ultimately impact property prices.

“One of the reasons property prices are so high in Australia is because investors underpin about one-third of all residential property purchases,” he said.

Both the NSW and Victorian Premiers are on SQM’s list.

Due to large falls in housing turnover, should they win their respective elections, Christopher says they might try to stimulate the market by encouraging investor activity.

Both Premiers took similar policy action over 2016 and 2017 to help first home buyers enter the market and deter investor activity.

In 2017, Andrews introduced a stamp duty exemption for first-home buyers who purchase properties valued up to $600,000, plus stamp duty concessions for homes worth up to $150,000 more.

In a pre-election budget announcement this week, the Victorian budget has taken a $2.4 billion stamp duty hit.

Stamp duty collections from property increased to $6.8 billion, from $788 million during the year 2017 to 2018.

NSW Premier Gladys Berejiklian has the power to control the release of land, impacting property supply and demand, and the power to set the rate of stamp duty.

While stamp duty is a huge revenue winner for NSW, last financial year the state reportedly gained more than $7.3 billion in stamp duty, it’s also a wet blanket on property demand in Sydney.

This week NSW announced the biggest stamp duty reform in 30 years, with stamp duty brackets amended to index against inflation, better reflecting the current housing market.

Perhaps no introduction needed here. He doesn't live in Australia or own property here, but Donald Trump has the most influence on international lending costs... and is arguably the most powerful man in the world.

Christopher says Trump's spending and revenue policies in the world's largest economy has put upward pressure on US Bond yields and subsequently interest rates globally.

“He is responsible for the US Government’s economic policies and therefore has a big influence on the growth of the global economy and the level of global market interest rates,” he said.

“This, in turn, has forced some of Australia’s big banks to raise mortgage lending rates outside of the RBA because their funding costs have increased.

“Any US economic growth boom boosts global growth because the US is simply so large.”

If the US economy continues to grow in 2019, Christopher says bank interest rates may increase again.

While he may have had little time in his new role as Prime Minister to influence the housing market, PM Scott Morrison wields power over many economic variables, including government spending, immigration and tax laws, all influencing property prices.

"Morrison also helps decide personal taxation levels and laws. The taxation concessions that allow investors to negatively gear property have been a big prop for property prices," Christopher said.

Westpac is Australia’s second-largest residential mortgage lender, after the CBA.

The big banks' influence on mortgage lending, and therefore property demand, has significantly increased since they started to raise interest rates outside of the RBA.

“While Westpac can’t in itself crash the property market, it can help set the tempo with the other majors, which collectively can hit the market hard, or on the flip of a coin, stimulate it,” Christopher said.

Matt Comyn leads the list of influential bank CEOs as head of the nation's biggest residential mortgage lender.

“Overall, we see there is still risk of further credit restrictions adopted by the banks in 2019, such as the additional cross-check on loan applicants stated expenses,” Christopher said.

The Australian Prudential Regulation Authority’s power as a regulator means it exerts huge influence on the demand for property loans and demand for property.

Byres was appointed the chairman of APRA in 2014 for a five-year term.

“The trigger to this current housing downturn can be placed back to the point in March 2017 when APRA announced there was going to be a major crackdown on interest-only lending,” Christopher said.

“At the time, interest only lending represented 40 per cent of all new loans written… Byrnes wanted that number to come down to 30 per cent.”

No other economic variable has greater impact on the level of property demand than interest rates. And governor of the RBA Dr Philip Lowe is the most significant individual setting interest rates, explains Christopher.

Lowe will have a large influence over dwelling prices in 2019.

“It’s fair to argue he has more power over the property market than anyone else in Australia, and his power comes without any of the rhetoric that comes with the politicians who feature further down our list,” Christopher said.