The old saying goes that the best time to start was yesterday but the second-best time to start is now.
That rule has generally applied to property, too.
But now confidence has tanked and no one knows what to do.
The Albanese government’s changes to negative gearing and capital gains tax are meant to help first home buyers but now no one wants to buy.
House prices declined by one per cent in Sydney and Melbourne in June and Domain now predicts that prices will drop by up to seven and eight per cent in those two cities respectively over the next year.
On a median-value home, that’s a loss of $122,000 in Sydney and $84,000 in Melbourne.
So you end up in something of a Mexican standoff.
People are too scared to buy right now because they want to see what happens to the market.
No-one wants to be the poor schmuck who buys now only for prices to continue falling.
Not only could you have bought for less but you’d also be losing value.
The auction clearance rate in Sydney tumbled to 43.1 per cent last week, Melbourne to 46.6 per cent and Brisbane to 36.8 per cent.
Owner-occupiers and investors alike are too scared to wade into a market they can’t predict.
Investors don’t want to lose money, because the whole point of investment is to make a profit, and first-home buyers can’t afford to lose money.
So now everyone stands around waiting to see what happens. But if everyone does that then nothing will happen.
Vendors, too, are being scared by the uncertainty.
On the last weekend of May, 21.9 per cent of auctions in Sydney were withdrawn.
On the last weekend of June it was 39.5 per cent.
If people aren’t buying and prices are falling then they may as well sit tight for a while and see what happens.
The government’s tax changes have completely shot confidence in the market.
And on top of that you have high inflation driven by government spending that has caused high interest rates – and the possibility of at least one more rate rise.
It is not a seller’s nor a buyer’s market, which is the opposite of what the government promised.
Budget modelling – which both Prime Minister Anthony Albanese and Treasurer Jim Chalmers have been repeating in recent weeks – said better housing affordability would be achieved by slowing the rate of price growth, not causing it to fall.
Homeowners were effectively promised that the existing values of their properties would be unaffected.
The early evidence in the big cities is to the contrary.
And no one else wants to join that unfortunate cohort.
Strangely enough, people who wanted to buy their first home didn’t wake up the day after the federal budget having magically materialised the money they needed to put down a deposit on a home.
They were never going to be able to buy any time soon.
Now investment has dropped off and everyone else has been spooked.
Caleb Bond is the host of The Bond Report on Fridays at 5.00pm and co-host of The Late Debate Monday – Thursday at 10.00pm, as well as a SkyNews.com.au Contributor. Bond also writes a weekly opinion column for The Advertiser.