Hi everyone. Today on the 19/5/2019, the results of the election were Coalition getting a victory staying in parliament for the second time and the Labor party losing. At this moment of publishing this article, Labor will not have enough seats to form majority government even if they win all 7 seats in doubt. As to the reason as to why Labor lost, I believe their policies were one of the main causes.
The policies which I believe is the red flag was Labor's policy to remove negative gearing and to give a flat rate for house sales. Both of these policies would push an already falling property market with more downward pressure. If Labor won, the property market would cause a snowball effect accelerating the decline of the Australian economy. Here's my take of the sequence of events.
- Negative gearing is gone past first home purchase discouraging investors to purchase multiple properties
- Less home sales occur and prices decline causing people under mortgage stress to have their properties go under water.
- More ppl sell at a loss to avoid further losses from devaluating houses causing oversupply of properties for sale.
- Demand for construction drops faster as more workers are laid off. Retail suffers as demand for home appliances/furniture decline after.
- Employment drops and people have less money to spend.
- The GDP drops and the companies make less profits causing stock market drops. The Australian dollar drops.
Just before the election, Scott Morrison introduced their 5% deposit for mortgage policy. This Youtube video goes into detail as to the implications of such policy. This will be interesting as I believe the Liberal election victory has bought Australia (IMO) 4 months before the bubble bursts. Meanwhile, Bitcoin has done extremely well shooting past the $6k resistance area. The first half of 2019 has been more polarised politically and economically and I expect things to ramp up in the future.
Anyways, thanks for reading this post and stay tuned for more updates.