Politics and property: how elections influence market - January 2025
January 31, 2025 / Written by Rich Harvey
By Rich Harvey, CEO & Founder, propertybuyer.com.au
With a federal election looming in Australia—set to take place before 17th May—many property buyers and investors are wondering how the market will respond. Elections have a way of shaking up confidence, creating uncertainty, and sometimes even stalling major financial decisions. But are these fears justified? Or is this actually a prime time to buy?
We’ve recently seen a new US President installed in the White House with strong views on his nation’s direction with implications for political machinations around the globe.
This period has had me thinking about how elections have traditionally affected property markets and economic confidence, and whether this year’s event will drive real estate prices and sales activity.
My conclusion is this – those who are buying right now may find themselves taking advantage of an unusual phenomenon we see during almost every election cycle – and that’s a thing I call “Poll Paralysis”.
Scared stiff
Every time an election is called, we see the same knee-jerk reaction in the market.
It’s that buyers and sellers freeze in their decision making.
There’s a misconception among property stakeholders that a change of government will have a direct, immediate and substantive impact on the price of housing. As such, most wait to see what the election result will be before they proceed with any real estate plans.
Now, I admit there are circumstances where elections can affect markets. For example, at a local government level, one party could campaign on the back of town planning changes or streamlined development approval processes.
At a state government election, a hopeful politician might push the agenda for raising or lowering land tax or other property-related charges.
And federally we’ve all seen the implications of debates around housing supply and taxation. For example, discussions in the past about the pros and cons of changes to negative gearing and CGT have played out in the results.
So, all this chatter during the campaign will cause many buyers and sellers to stop in their tracks as soon as an election date is announced.
But I think those purchasers who delay their decision to buy because an election has been called are a bit foolish… and I’m here to tell you why.
Reasons to stay active
There are several reasons why you shouldn’t expect an election to dramatically affect property prices in the short-to-medium term.
For starters, Australia has one of the most stable political landscapes on the planet.
We have a well-ordered democracy that is respectful, civil and orderly. We’ve seen no political violence I can recall, and there’s never a suggestion our elections aren’t free and fair.
Results are credible and our transition-of-power protocols have stood the test of time.
Here’s the other thing – while our two-party system means we have groups with different ideologies, neither would be classed as “radical” by most Australians. Neither party has proffered
policies in the past that would be so destructive as to cause Australia to plummet into some economic black hole.
Whether you vote conservative or progressive, the final result will be a government that wants a strong and stable economic foundation for Australia. It may not always be the party you wanted, but it will be a party of generally good sense.
Major political parties also know that the vast majority of Australian household wealth is tied up in real estate ownership. CoreLogic analysis shows Australia’s residential real estate is worth a staggering $11.1 trillion – that’s almost three-and-a-half times more than Australian Listed Stocks, and close to three times the size of national superannuation investment.
Source: CoreLogic
Those sorts of figures mean no sensible politician who seeks to be elected to power would risk isolating property owners by causing damage to the residential property sector.
Finally – and perhaps most important of all – successful property ownership is a long-term proposition.
The average time a person holds onto a property is 11 years which equates to approximately one property price cycle. The savvier purchasers will hold it for two cycles or longer.
During that period of ownership, most will experience at least two federal elections, and maybe three state and local government elections. Throughout those 11 years there will also be interest rate movements, industry booms and busts, building cost fluctuations, changing renter demand and so on, and so on.
My point is this – elections don’t tend to move the needle much in terms of a property’s long-term value shifts. Delaying your decision to buy simply so you can see how an election pans out is illogical, because the years of ownership will smooth any possible bumps in the road.
How to take advantage of the 2025 election
So, if elections don’t matter, how can you as a buyer take advantage of poll paralysis this year?
Well, it’s by deciding to act when others are fearful (to quote a famous Warren Buffet idiom).
When election periods approach, any seller who has their property listed for sale will see less demand as buyers wait in the wings. That means less competition for those willing to act during an election campaign.
The upshot is that if you want to be one of these smart purchasers, right now is the best possible time to buy.
By working with a reputable, experienced, well-connected buyers’ agent, you can unearth property options while others are staying on the sidelines. This puts you in the box seat during negotiations.
So, if you want profit from political posturing and poll paralysis, then get popping. Contact our team at Propertybuyer and let us show you how to break free of election fear and secure your ideal home while others are refusing to move.
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