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Adelaide caught up in election hype: Raine & Horne

The prospect of a possible change of government in the upcoming election has prompted investors to buy up property in Adelaide, according to Raine & Horne.

“Some investors aren’t waiting to see if there will be a change of government on election night and are buying up properties in Adelaide now to ensure they don’t miss out on the current negative gearing benefits for established properties and the 50 per cent capital gains discount,” James Trimble, General Manager, Raine & Horne said.

Mr Trimble predicts uncertainty around when the Labor Party’s proposed grandfathering period would start and end for the property changes will prove calamitous for many markets around Australia.

“The expectation is the current benefits will end on 31 December, so this will give investors six and half months to lock in an investment and earn the existing tax benefits. After this deadline, negative gearing for established properties will be gone and the discount will drop to 25 per cent.”

“The smart money is buying investment properties now as they know they will hold the current benefits regardless of whether red or blue wins next week,” he said.

In Adelaide’s inner southwest, John Cullen, Principal of Raine & Horne Kurralta Park, said the prospect of changes to property taxes was influencing sales in his region.

“There is a definite correlation between investor activity and fears about what will happen after the election,” Mr Cullen said.

“The fear of missing out on negative gearing is driving some activity for buyers, while some are waiting to see who will win on Saturday week.”

In Gawler in Adelaide’s north, investors are snapping up four-bedroom houses for about $385,000, which are renting for $390 a week, according to Raine & Horne.

“This represents a gross rental yield of 5.4 per cent, which means that after costs such as mortgage interest, maintenance expenses and management fees, most investors are still using negative gearing in this region,” said Gwen Levesque, Co-Principal and Head of Property Management, Raine & Horne Gawler.

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