This weekend Aussies are dealing with something new. A new beer on tap at their local, a type batch of beans at their favourite cafe, and oh yeah – a new prime minister. After a vote Friday that ended Malcolm Turnbull’s time in the top job, Scott Morrison got the nod for the big gig.
So for the 5th time in the 8 years since 2010, Australia has a new PM. Geez that’s a lot. To put it in perspective, in the 18 years between 1992 and 2010? Australia had just 3 changes of PM!
Anytime you take on a topic like this a lot of Aussies have two concerns in mind:
A) They feel like nobody says what happens in Canberra will actually impact their daily lives
B) They’re not too keen to get another round of poli gossip instead of actual answers.
Instead of batting these two critiques away, I agree with them.
There’s too much coverage about who insulted who, who lost their luggage travelling overseas or bringing up something ancient like who got caught doing a nudie run back in their uni days.
It may play well with the tabloids or on social media – #nudiegate anyone? – but it doesn’t actually answer the essentials questions most Aussie first home buyers really want to know:
1. How does this Canberra leadership drama impact the Aussie economy?
2.What will this new prime minister mean for me as a first home buyer?
These are important questions for you if you’re looking to become a first home buyer soon, and ones I’m going to knock over an answer. So, let’s get into it.
How Does This Canberra Leadership Drama Impact the Aussie Economy?
It’s not breaking news to say our economy is at its best when everyone is firing on all pistons. Like a premiership winning AFL or NRL team, when everyone knows the playbook, knows what their teammates are going to do, and has a clear sight on the goal, strong results will follow.
Whatever party is in power in Canberra, when they’re on the same page they play a strong game. Even if you don’t agree with some of the stuff being done by the government, it’s better for all Aussies that everyone in Canberra fields a strong team, rather than a bunch of squabblers.
When there is in-fighting going on in the nation’s capital, it’s a lot like being unable to get a proper signal on your TV. Aussie businesses, entrepreneurs, community groups, and others are unable to get a clear idea of what’s happening on the playing field. This creates a ton of uncertainty that shrinks confidence, stalls growth, and can just makes things miserable all over.
In the past week its been the Liberal Party to blame for this chapter. The particulars of it are best detailed elsewhere but basically there’s a bloke from Sydney called Malcolm who was PM, another bloke from Sydney called Tony who was PM a while back, and a guy from Queensland called Peter who would like to be PM, and they all decided to have a throw down to sort it out.
As a result, we got someone called Scott as our PM. Make sense to you? Many Aussies are understandably still trying to wrap their heads around it. What’s done is done, and ‘ScoMo’ as he’s called is the new PM. But there’s also the risk this is going to go anyway as these guys Tony and Peter might want to circle back and go again.
Malcolm has decided to retire and get away from all this mess. And what a mess it has been, not just for the Liberals but for all in Canberra. Nobody from Labor was involved in this leadership issue this time around, but they have form here too. Last time they were in power they had a back and forth going on between Kevin Rudd and Julia Gillard.
They’ve since changed their leadership rules which means the sort’ve stuff we’ve seen is less likely to happen again, but still it’s been a really poor decade in Canberra. Some people are calling for the Liberals to now match Labor on these new leadership rules, so we don’t keep seeing something that looks like a revolving door in the PM’s office. Whatever the case, the fallout of this instability can be huge,
What Will This New Prime Minister Mean for Me as a First Home Buyer?
Leadership changes can have a big impact upon everyday Aussies, far beyond politician’s offices in Canberra. Anytime a new leader comes in there is the potential for them to change up a lot of old policies that the last leader had. This requires rebranding some documents in Microsoft Word and firing the printer up once more, but can also bring huge damage to market confidence.
An Aussie business all set to expand operations and open up a new office may wait because they’re unsure what the new PM will mean for them. An overseas business considering setting up shop in Australia may think twice because they don’t think they can be certain about what Canberra will get up to.
It can even hit Australia at a structural level – as while credit downgrades won’t be linked directly to leadership changes – a change in direction, or instability to just field a team and perform strong over the long term could see the Aussie government whacked with a credit downgrade.
All of that can make things like securing a job, building a business, or doing a ton of other things in Aus far harder. But despite this, there’s a bit of a potential silver lining in the past week’s events for first home buyers.
For many looking to get a foot into the market these recent events could be good news. Scott Morrison may be largely unknown to many Aussies, but he also is set to continue ‘business as usual’.
This won’t mean aftershocks are not still on the cards given the week that was, but at least he’s not coming into office with some new shocker like a plan to try and pair up Australia with New Zealand like an episode of the Bachelor.
If you’re an aspiring first home buyer, odds are good you’ve been looking for a while. If not for buying ASAP, you’ve likely been waiting a while for the right time to catch a market dip. Like the one we’ve been seeing recently in Sydney, Melbourne, and beyond.
This short-term instability – and the fact nobody is 100% sure it’s often and the new PM is going to be there too long – could see local and foreign investors stay back for a while as they feel a bit nervous about buying in the short term. Especially with all the other turbulence being seen across Aus property right now.
So first home buyers may find their path ahead a little easier in the short term. This is good for you, and if you do land your first home soon I’m really happy for you! But I’ve also gotta tell you
beyond the short term, the impact of all this leadership stuff further along could be unpleasant.
What Does This Mean for First Home Buyers?
If these past couple of years do turn out to be an exceptional period in Aussie history – but one that ultimately stabilises – then the antics we’ve seen in Canberra won’t worry much a first home buyer who plans to hold their home at least 5 years or more. In the long term, if this does become a regular feature of the political landscape in Australia, then it’s likely the housing market will just factor it in.
After all, it may be interesting times in Washington with the Trump era, but LA and New York property is still pricey, ditto the same with Tokyo prices though Japan’s gov has had some upheaval lately.
The real risk for a first home buyer would be in the mid-term. If all our PMs get rolled every couple of years that’s going to be an issue. Especially because it may further diminish confidence and productivity in the economy as government and business leaders are too scared to do anything bold to advance Australia because they are scared of a pushback in Canberra.
As I’m often in the habit of noting: this latest episode from Canberra is not going to mean a beachfront property in Bondi goes for the cost of a coffee, or you can land a huge loft in St Kilda for the price of a Happy Meal. But it does mean anyone buying their first home with a plan to sell it on and upsize in a few years should really think carefully.
Nobody is saying you can’t follow this plan through, but if price growth is looking a little shaky now, and so too the political climate in Canberra, it may be best to look again and see if you can land a property with some more size you can bunker for a few more years.
Even if that means a longer commute or doing away with some expenses elsewhere to bump up your borrowing capacity. Nobody is saying doing this is really easy, but seeing 5 more years of Aussie property growth ahead like the last 5 we’ve seen is looking increasingly hard.
I not only want to ensure Aussies have all the info to become first home buyers, but also the best odds to grow the wealth they have in their home, to maximise their options in future.