With the upcoming Federal Election right around the corner, what will the potential impacts be for the national property market as we head to the polls? Unless you’ve been living under a rock, every Australian knows that it’s well and truly election season. With campaigning and party spruiking infiltrating everything from billboards to social media, politicians are doing their best pitching to causes that resonate with just about everybody. As one might guess, a major topic that’s getting a lot of coverage is tackling the soaring cost of living and the prices linked to our national property market. However, the very real prospect of rising interest rates in the immediate future has been a bit like releasing a cat amongst the political pigeons, with many of us pondering how the upcoming election results will influence Australia’s property market in the years to come.
How The Election Could Affect Australia’s Property Market
A study conducted in 2013 by Hotspotting concluded that while the actual elections themselves have little to no impact on the property market beyond impacting clearance rates on the election weekend, the winner themselves can have an enormous influence on how the property market moves forward. Traditionally, the five week period between calling an election and polling day can be a stagnant period in the nation’s property market, with many buyers and sellers opting for a “wait and see” approach before making any big financial commitments. Let’s not forget that there’s also two other big variables to consider with how the election will influence house prices: buyer fatigue from soaring house prices, and the inevitable interest rate rise that is sure to bring them back down to Earth. Unfortunately, neither Scott Morrison or Anthony Albanese alone will be able to change either of these facts as standalone figures, but they can roll out new measures to help tackle them. Brendan Coates, the economic program director with the Grattan Institute, said the post-election housing market this year would be quite the opposite of what the nation witnessed in 2019, which saw the end of an 18-month downturn when Scott Morrison was re-elected in a “miracle” win over then Labor leader Bill Shorten.
“Interest rates rising will affect all housing across Australia. There’s new data from the Reserve Bank of Australia showing that if interest rates increase by as little as two percentage points, then house prices will reduce by 15%.” This time, it would seem that both the LNP and ALP have shied away from any major policy changes that could affect the property market. Many would argue that Bill Shorten’s proposed reforms to negative gearing and capital gains tax were one of the reasons why Labor lost the 2019 election, with new leader Anthony Albanese axing any such changes. Though the incumbent Morrison has publicly extended the First Home Deposit Scheme, which offers first home buyers a way into the market with just a 5% deposit, it’s not expected to change the outcome for the market after the election as the scheme has already been in operation for a number of years. In contrast, Labor’s proposed initiative has been polarizing to say the least.
Announced by Anthony Albanese while campaigning in Western Australia, Labor’s Help To Buy scheme to address rising property prices will offer 10, 000 homebuyers the opportunity to share ownership with the Commonwealth. How it works is the Government will put in up to 40% of the purchase price for a new home and up to 30% for an existing home, before making those funds back if and when the property is eventually sold. Labor’s shared equity scheme, which will cost $329 million over the first four years, has previously been recommended by the Grattan Institute as part of the solution to the nation’s burgeoning housing affordability crisis. However, for better or for worse, all of us will have to wait and see how the aftermath of the federal election will truly affect the property market.
Your Guide For Navigating The World Of Home Loans
With a background in banking, finance, business development and project management, there’s no better advocate to have on your team than Nikki Berzin. As a fully qualified mortgage broker and director of Cherry Lending & Finance, Nikki is passionate about all things finance, and empowering her clients with the tools to hit their property goals is what she does best. If you’re looking to get into your first home, purchase an investment property or even want to look at your options for refinancing, the first step is starting the conversation. Get in touch with Nikki today, or call her directly on 0427 374 155 to bring your mortgage dreams to life. Disclaimer: Your full financial needs and requirements need to be assessed prior to any offer or acceptance of a loan product. Subject to lenders terms and conditions, fees and charges and eligibility apply. Credit Representative 499652 is authorised under Australian Credit Licence 389328.