With the constant vicissitudes involved in keeping the country running in the past three years, it's no surprise that the looming federal election is being discussed far and wide across Australia. Election day could be the catalyst of big changes across the nation, regardless of who wins at the polls, with the housing market in the mix to be overhauled.
House Prices?
A 2013 study by Terry Ryder of hotspotting.com.au concluded that elections themselves have little to no impact on the property market beyond impacting clearance rates on the election weekend. However, house prices have surged since the start of the pandemic. Sydney’s median house price was $1,360,543 in November 2021, a 36% increase from the November 2020 median of $1,000,170.
Policies?
With many voices calling for housing affordability to be an election priority, whichever party emerges victorious when we go to the polls could drastically affect policy around regulating the housing market. This means that the first thing to look out for is the federal budget, which Scott Morrison has announced will be released on 29 March. The federal budget will shed light on the government’s policies around housing affordability, including schemes like HomeBuilder, which may have repercussions for the housing market. Labor will likely craft their housing policies in response to the Coalition’s budget in the run-up to the election. The federal election can be called no later than 21 May, and with the necessary five weeks run-up, the election can be called in mid-April at the latest.
Regulations?
With market regulation being the foremost factor likely to impact property investors, the big question to ask is; which major party is more likely to introduce regulation? Labor promised a limit to negative gearing on new properties in their 2016 and 2019 election campaigns but has since dumped the policy. Despite being in favour of an economic recovery driven by loose regulations, the Coalition has pointed to the power of the Australian Prudential Regulation Authority to tighten lending standards if the housing market gets out of hand. Increased regulation means that there will be limits to the amount of money that banks can loan to people, affecting first home buyers and investors alike.
What does the future hold?
Looking back at how the market has performed under differing Governments, over the previous 17 years, pricing increase varies. Whilst both political parties governed over times of increase and decrease, one thing is evident, the market marches on. This can be traced to the multiple drivers of the residential property market such as employment, wage growth, access to capital and the like.
It is our view that whilst the election itself is unlikely to cause any significant short term upheavals to the property market, wise investors should keep an eye on the budget and consequential campaigns once the election is announced - we certainly will be.
If you would like to speak to property experts with their nose to the ground of market trends, why not get in touch today by calling John Wills on 0467 443 838 or email him at john@willsproperty.com.au