How Will The Federal Election Impact The Property Market?

April 29th, 2022 - by Brad Gillespie

The Prime Minister has called the next federal election, and the nation is heading to the polls on 21 May.

We look at what the election and its outcome might mean for homeowners, property investors and first home buyers.

What’s at stake for the property market in this election?

In the 2016 and 2019 federal elections, real estate was a hot button topic, with Labor’s proposed changes to negative gearing and capital gains tax taking centre stage. However, things are different this year, and there are few housing-specific policies flagged for the election.

Unlike in previous years, there is very little difference between the two major parties when it comes to housing policy. Labour leader Anthony Albanese has abandoned plans to alter negative gearing and capital gains tax. Both Labor and the Coalition have now guaranteed their support of negative gearing for the first time since 2013. Both also agree on first home buyer schemes. Neither party has indicated any major changes to the policy that would affect first home buyers, investors or existing homeowners looking to sell up and buy another property.

What was promised for the real estate sector in the pre-election federal budget?

Much of the budget’s focus was on delivering relief for households struggling with inflation and the rising cost of living.

When it comes to housing, the budget promised $2 billion to be used across an expansion of first home buyer schemes and low-cost financing for community housing providers to supply around 8000 more affordable homes. The Home Guarantee Scheme, which includes the New Home Guarantee and Family Home Guarantee, will be expanded with more places and the addition of the new Regional Home Guarantee.

Labor has also announced plans for a Regional First Home Buyer Support Scheme, as well as its Housing Australia Future Fund, designed to build 30,000 new social and affordable housing properties.

How is the impending election impacting the property market now?

In the lead up to previous federal elections, the property market has slowed down. Both buyers and sellers have been reluctant to make a move during the pre-election limbo. However, with much more certainty for the property market this time around, experts, including PropTrack economist Angus Moore and REIA president Hayden Groves are predicting the election will have little impact on either buyer or seller confidence or market conditions.

We can, however, expect polling day, Saturday 21 May, to be a quiet one for auctions. Just like Easter or Anzac Day, most vendors will avoid scheduling auctions on polling day for the simple fact that we will all be otherwise occupied casting our votes. At worst, the election may cause a brief lull in the market as vendors time their campaigns to avoid an election day auction, but it will be short-lived and temporary.

What will happen to property prices after the election?

After the Morrison government’s re-election in 2019, house prices rose. However, it was APRA’s relaxing of lending rules rather than the election result which saw prices go up, according to Brendan Coates, economic program director with the Grattan Institute.

Fast forward to 2022, and after a period of bumper growth, the housing market across the country is now starting to soften. Record-low interest rates are set to increase, with the first rise predicted to take place just weeks after the election. This will limit buyers’ budgets and reduce their buying capacity. Many experts are forecasting property prices will ease as a result, regardless of who is victorious on 21 May.

If you’re thinking of buying or selling in Sydney’s inner-city or inner west, get in touch today.