Do Elections impact the Property Market?

Federal elections have little effect on Australia's property market, despite common perceptions, according to new research. Analysis of data from the past seven federal elections by Domain shows neither major political party holds a significant advantage in boosting property market growth.

Liberal terms saw slightly better house price growth at 3.1 per cent compared to Labor's 2.9 per cent, while Labor governments oversaw stronger unit price growth at 4.5 per cent versus 1.4 per cent under Liberal leadership.

Domain's Chief of Research and Economics, Dr Nicola Powell, said the property market is influenced by factors beyond politics. "The property market is shaped by forces beyond politics," Dr Powell said. "While elections can affect policy and sentiment, the reality is far more complex than our long-held beliefs suggest."

The research did reveal some surprising insights about auction performance on election days.

Despite sellers typically avoiding scheduling auctions on election days, with numbers dropping by 50 per cent, those that do proceed achieve higher clearance rates than auctions held on surrounding weekends.

Auctions held on election days recorded an average clearance rate of 60.4 per cent, outperforming those held the Saturday before (59.5 per cent) and after (59.8 per cent) election day. This suggests election day might be an opportunity for sellers rather than a disadvantage.

Domain's data indicates that property transactions remain historically stable during election periods, challenging the common perception that elections cause buyers to pause their property purchases. This suggests short-term electoral events don't significantly disrupt buying behaviour. However, prolonged political uncertainty can have an impact on the property market over time.

Domain's modelling shows that even a one-point increase in political uncertainty can result in a decline of 8.08 property sales, with extended periods of uncertainty potentially leading to thousands of lost transactions.

First home buyer activity showed some minor differences between different government terms. Labor governments saw higher first home owner-occupier loans at 34.4 per cent compared to 30.5 per cent during Liberal terms, indicating some policy differences may influence certain segments of the market.

The findings suggest property investors and homebuyers should focus less on which party is in power and more on fundamental market drivers when making property decisions. "While elections can affect policy and sentiment, the reality is far more complex than our long-held beliefs suggest," Dr Powell said.

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