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Business confidence has rebounded since the election

August 14, 2019

In much the same manner as residential markets, business confidence has ticked up after a sharp fall in June and a period of volatility around the Federal Election, according to the latest NAB Monthly Business Survey.

Simon Winter, Principal, Raine & Horne Business Sales, agreed that business confidence has picked up since the election. “The tap turned off for business sales in January because everyone recognised the impending election would occur around May,” Simon said. “There was a sense of anxiety about the possibility as a change of government.

“There was widespread fear the possible changes to negative gearing, franking credits, and superannuation would hurt many business owners who also own property and have decent retirement nest eggs.”

The fear about the impact on retirement savings served to compound the usual effects that elections have on business activity, noted Simon. “Typically, people stop spending, and retail goes quiet.

“Subsequently, we received fewer enquiries from business owners seeking a sale and those looking to buy a café, childcare centre, motel, or bakery.”

Apart from the election, the banking royal commission also created issues for those seeking commercial loans, according to Simon. “The banks hit the brakes and wouldn’t lend money. It was a double whammy effect with political uncertainty and the royal commission impacting confidence.”

Since the election, there has been a 50% increase in business sales enquiries, according to Business Sales, which commands about 40% of the business sales in Adelaide, which are conducted by brokers. Simon continued, “Our enquiries and phone calls surged in a matter days after the election. In the blink of an eye, you could tell the election was over. There was genuine relief right across the SME sector.”

That said, the issue of tight lending conditions continues to frustrate activity to an extent. “The market is much better. But if the banks relaxed the commercial lending reins a little more, it’d be the strongest business sales market we’ve ever seen. There is a lot of pent of demand.”

If you are considering a business sale or securing your own SME, contact Raine & Horne Business Sales on 08 8361 3074.