The business development and marketing manager, who has daughters aged four and 10, says she is already considering her next property investment.

“I’m so excited,” she says about expanding her portfolio, built up over 20 years. “I had been very concerned about a recession if Labor was elected but now I’m looking forward to buying property number five.”

High hopes for weekend auctions

Buyers’ agents and brokers claim this weekend’s sales could be the biggest guide to market confidence in five years, which was when the prudential regulator started imposing controls on lending to investors, leading to a sharp slowdown.

Buyers' agent Cate Bakos points to a "double dose" of positive sentiment with the Coalition win and potential lending changes. Elke Meitzel

“The brakes are off,” says Emma Bloom, a director of buyers' agent Morrell and Koren about the impact on market sentiment of tax, political and regulatory changes during the past seven days.

The auction this weekend of properties in the $2 million to $5 million range in Melbourne and Sydney should provide the first real evidence of the impact on seller expectations and buyer confidence, say agents. The properties coming under the hammer have been listed for sale for several weeks.

Hopes are high that cashed-up buyers will return for one of the last big auction weekends before they retreat to the snowfields or summer yachting holidays on the Mediterranean.


Melbourne-based buyers' agent Cate Bakos says: “There has been a double dose of positive sentiment. Negative gearing is here to stay and APRA [Australian Prudential Regulation Authority] is discussing easing serviceability. The feeling is the worst is behind us. Easing loan serviceability is a game changer.”

Bakos says there has been a sharp pick-up in calls and questions about the market outlook since last weekend.

Bloom claims the election result has cleared the air, provided positive direction and heralds the bottom of the market. “Things are on the up,” Bloom adds. “Confidence is beginning to return.”

A positive bellwether was last Sunday’s sale of a 47-hectare rural property in Merricks, about 75 kilometres south-east of Melbourne, for about $4.9 million, or 20 per cent over reserve. Bloom says: “This is good a sign as any. It is luxury purchase, not a primary residence.”

Michael Parker, a senior salesman for RT Edgar, who sold the property, says there were between four and five bidders for the property, which has secure sea views.

Rich Harvey, president of the Real Estate Buyers Agent Association of Australia, believes the market trough is earlier than expected and a recovery could follow.

“There are significant opportunities around the $2 million to $3 million range around Sydney because prices have been coming down,” says Harvey. “There’s an opportunity to get ahead of the curve.”

Recent auction clearance rates well above 50 per cent should encourage more sellers, which will increase market activity and should boost demand, say other agents.


Knocking on the door

Recent price falls and low mortgage rates are also attracting first-time buyers.

According to finder.com.au, which monitors fees and prices, there has been a 40 per cent increase in traffic to its web pages targeted at first-time buyers since the federal government announced a first-home loan deposit scheme.

The proposed scheme is intended to help eligible first-home buyers purchase a house with a deposit as low as 5 per cent by saving them lenders’ mortgage insurance, which covers lenders’ risk for buyers with less than 20 per cent deposit. It provides surety for the first 15 per cent of the loan.

Shane Oliver, AMP Capital chief economist, says the election result, promised boost for first-time buyers and additional rate cuts could bring an earlier end to the bottom of the cycle.

Investment banks like UBS and Macquarie are more guarded about the impact of the coalition victory, arguing it reduces the risk of worsening market sentiment but might only have limited upside.

Lenders are cautious after two years of intense scrutiny from prudential regulators and the banking royal commission, which is costing billions of dollars in compensation to former borrowers and savers.

Slow wages growth, a sluggish economy, rising apartment supply and growing unemployment will also continue to hold back prices, they say. In addition, years of runaway growth have blown out household debt to record levels and turned Melbourne and Sydney into some of the world's least affordable cities.


What APRA change could mean

But there is widespread support for APRA's plans to remove the interest rate benchmark, making it easier to borrow.

The benchmark is a buffer to ensure borrowers can continue to pay their mortgages if rates rise. Since its introduction, interest rates have fallen and differential pricing has been reintroduced for owner-occupiers, investors and interest-only borrowers.

Reducing the benchmark from 7.25 per cent to 6.5 per cent would allow a couple with a combined income of $250,000 the capacity to borrow an extra $122,000, or about $1.6 million, according to RateCity.com.au, which monitors rates and fees.

A floor of 6.25 per cent would raise the amount they could borrow by $165,000. The calculation assumes one parent earns 70 per cent of income and the other 30 per cent and that monthly household spending is about $4000.

Borrowers with regular income that comfortably cover current and foreseeable expenses should benefit, says RateCity.