Ep. 109: The likely role of Property in the lead-up to the 2025 Federal Election, with Richard Morgan

In this installment of the Geared for Growth podcast, Mike teams up with mortgage broker and Founder of Freedom Funding, Richard Morgan, to delve into a timely and enlightening conversation regarding the lending market’s current state and the potential impacts of the forthcoming 2025 federal election on property dynamics and the housing affordability crisis.

Richard sheds light on the diminishing borrowing potential for many investors and details the multitude of contributing factors, from the widely debated interest rate hikes to the subtler adjustments in lending buffers by APRA. In doing so, he provides a fresh perspective on the banking industry’s constraints and the importance of bodies such as APRA and RBA working in concert to achieve effective economic outcomes.

Mike and Richard discuss the likely timing of a drop in interest rates and consider what impact that will have on the property market when it does eventuate. Richard talks to the inflationary pressures which lead to higher rates and gives perspective on the monetary policies and stimulus packages put forward by both domestic and international governments during the COVID years.

With the 2025 federal election looming, Mike and Richard analyse the outlook for property-focused policies and discuss potential initiatives against the backdrop of a rental crisis and housing affordability concerns. Mike highlights recent impacts of tax reform, citing the repercussions of land tax changes in Queensland, while Richard shares his perspectives on possible federal interventions, including negative gearing and capital gains tax.

This enriching conversation concludes with Richard offering insights into the strategies sophisticated investors are employing to seize opportunities amidst challenging economic conditions. Given the likelihood of ongoing market volatility, this episode of the Geared for Growth podcast is essential listening for any discerning investor.

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Mike teams up with mortgage broker and Founder of Freedom Funding, Richard Morgan, to delve into a timely and enlightening conversation regarding the lending market’s current state and the potential impacts of the forthcoming 2025 federal election on property dynamics and the housing affordability crisis.

• What’s happening in lending at the moment
• The decrease in borrowing capacity and the reasons behind it
• The strength of our banking sector
• Dealing with the COVID hangover of inflation
• The impact of the stage three tax cuts on borrowing capacity
• The property battleground in the leadup to the federal election
• The likelihood of property centered tax reform
• What sophisticated investors are doing to gain greater exposure to the market

“Most borrowers can’t quite get enough in terms of borrowing capacity and the reason for that is all of those RBA rate increases have really hampered borrowing capacity. If you look at the individual borrowing capacity calculator it’s some 40% down” 1:17

“In October 2021 APRA changed the guidance around the buffer required for prudential lending and so the buffer that was being applied to existing and new lending was 2.5%, that went from 2.5% to 3% which took a little bit of wind out of the sails from a borrowing capacity perspective as well” 2:45

“The governments around the world made the best decision they could at the time of the information they had and you know that as a result we are where we are so we’re dealing with that hangover now in terms of the inflation” 7:46

“You really want to get into that market before you see things shift because once you build up that momentum in the market and you’ve got multiple bidders buying properties and all competing for the same set of turf then prices really start to go start to go up from there” 13:39

“It certainly seems like an easy target for the government to go after and so I wouldn’t be surprised to see tax reform centered around property investing, centered around things like CGT, land tax and so forth that has the potential to make it a little bit more difficult for investors but I think it will be part of sweeping tax reform across the board” 16:46

“Now is certainly not the best time to go after that group because property investors are needed in terms of providing housing supply for people that are renting and coming into the country” 20:53

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