In 2019, former Labor leader Bill Shorten’s proposal to scrap negative gearing and the capital gains tax caused hesitancy and a drop to investor confidence across the country. In early 2021, they abandoned these changes, and in comparison to the 2016, and 2019 elections, there is less noise about the property market surrounding the elections.
Why? Neither party had proposed significant changes to housing policies. Both the Coalition and Labor believe in expanding the first home buyer loan deposit scheme which allows some first home buyers to purchase a property with as little as a five per cent deposit.
Interestingly, according to CoreLogic data, property prices going as far back as 1990 have gone through ebbs and flows regardless of which side of politics was in power.
What is each side bringing to the table?
Housing affordability is at the centre of the conversation for both parties, as the Australian housing market has soared $2.6 trillion since the start of the pandemic, and is now worth $9.8 trillion.
In the latest federal budget, and in a bid to tackle housing affordability, Scott Morrison’s Coalition proposed an additional $2 billion to housing providers to deliver about 8000 more affordable homes, and an increase to the accessibility of the Home Guarantee Scheme.
This would see 35,000 first home buyers, 10,000 first home buyers in regional areas, and 5,000 spots aimed at single parents, to get a foothold in the property market with as little as a 5 per cent deposit.
The extension of the scheme has been backed by Anthony Albanese’s Labor party, who also proposed $10 billion to build 30,000 social and affordable housing properties under the Housing Australia Future Fund.
Industry economists are divided on how the election will impact the market. PropTrak economist Angus Moore has said that federal elections can have a temporary headwind for activity, and that there will be “little impact on buyer or seller confidence or on market conditions.”
Alternatively, market analysts are arguing that increased support to buyers will further add to the buoyant demand vs supply issue we are facing across the country, which will in fact increase property prices.
While there are many different viewpoints, we will be watching the market closely before we head to the polls (and a democracy sausage) on May 21.
I hope you enjoy the read.