How will the Federal Election impact the Australian property market?

With the 2025 Federal Election looming, Australian property investors and homebuyers are naturally keen to understand how the electoral outcomes could impact the real estate market.

Historically, elections bring uncertainty, and uncertainty tends to make markets cautious. Buyers hesitate, sellers hold back, and investors wait to see if there will be major policy changes affecting taxation, lending, or housing affordability.

However, I've found that this temporary slowdown often creates opportunities for savvy investors willing to act amidst the uncertainty.

However, history shows that while elections may cause short-term disruptions, they rarely change the fundamental forces driving property prices in the long run.

Let's be blunt...the Australian political system, by and large, supports policies that support the value of residential real estate, which is a significant component of national wealth.

No major political party wants to preside over a property downtown that will adversely affect property owners.

Elections create short-term uncertainty, but the market recovers quickly

Election campaigns typically last a few months, but during that time, property market activity often slows down.

Buyers and sellers prefer certainty when making big financial decisions, and a change in government can mean potential shifts in housing policies, taxes, and economic settings.

Historically, auction clearance rates tend to decline in the months leading up to an election, as both buyers and sellers take a "wait and see" approach.

Similarly, property listings often drop pre-election, but rebound quickly once the results are known.

However, once the election is over, regardless of who wins, market confidence typically returns within weeks.

Note: If you're looking to buy, pre-election jitters can create opportunities to secure a property with less competition.

The key policy areas that could shape the market

While elections create uncertainty, the real concern is not the election itself but the policies the winning government implements.

Investors should be paying attention to these key areas:

a) Negative Gearing & Capital Gains Tax (CGT)

Negative gearing and CGT discounts have been long-standing features of Australia’s property investment landscape.

However, they often become political battlegrounds.

• In the 2019 election, a proposed change to limit negative gearing and reduce CGT discounts led to a sharp decline in investor sentiment. Once it became clear that no changes would be made, confidence rebounded, and house prices surged.
• In the 2022 election, both major parties largely avoided these issues, preventing any major shocks to the market.

If a future government were to restrict negative gearing or reduce CGT discounts, it could lead to a pullback in investor demand, particularly in markets heavily driven by investors, such as Sydney and Melbourne.

However, neither party is suggesting this will happen at present.

b) Housing Affordability & First-Home Buyer Schemes

Governments often introduce grants, subsidies, or shared equity schemes to support first-home buyers.

For example:

• The First Home Buyer Scheme has allowed buyers to enter the market with just a 5% deposit, significantly boosting demand in the lower end of the market.
• The Help to Buy Scheme has offered shared equity, reducing upfront costs for first-home buyers.

While these schemes are aimed at assisting entry-level buyers, they usually push up property prices as more demand enters the market without a corresponding increase in supply.

c) Supply and Development Incentives

One of the biggest challenges in Australia’s housing market currently is the lack of supply.

Currently the government  is focussing on incentivising private developers to build more homes by offering tax benefits, rezoning land, or fast-tracking approvals.

However, property supply is a long-term issue, and election policies rarely result in an immediate fix.

Note: Policies impacting tax incentives (negative gearing, CGT) tend to affect investors more than affordability measures, which typically benefit first-home buyers.

What history tells us about elections and property markets

Looking at previous Australian elections, a clear pattern emerges:

1. Property markets slow down before the election – Buyers and sellers hesitate, listings drop and transaction volumes decline.
2. If major property-related policies are proposed, investor sentiment is affected – For example, the 2019 election caused investor anxiety due to proposed negative gearing changes, whereas the 2022 election had minimal impact as no major reforms were on the table.
3. Post-election recovery occurs quickly – Regardless of which party wins, property prices typically stabilise and resume their trajectory within three to six months.

For example, in the six months following the 2019 election, Sydney house prices rose significantly as investors re-entered the market after a period of hesitation.

Note: Elections create short-term uncertainty, but they do not override long-term property cycles driven by population growth, supply shortages, and interest rates.

Interest rates and the economy matter more than elections

While election outcomes can shape policy, one of the biggest factor influencing property markets is monetary policy—particularly interest rates.

• If an election coincides with rate cuts, property prices tend to rise, as borrowing becomes cheaper.
• If interest rates remain high, demand can weaken regardless of who is in government.

For example, despite the 2022 election having minimal impact on the market, the RBA’s rapid interest rate hikes in 2022-2023 caused property price declines nationwide.

Note: Elections are a distraction—interest rates, economic growth, and supply-demand dynamics have a bigger impact on property prices.

Final thoughts: what should investors do?

History tells us that while elections create temporary uncertainty, Australia’s property market is resilient and continues to grow over the long term.

So my recommendations are:

• Ignore election noise and focus on long-term fundamentals. Property markets follow bigger economic cycles that go beyond short-term political events.
• Look for pre-election opportunities. If uncertainty causes buyers to hesitate, you may find less competition and better deals in the lead-up to an election.
• Watch for policy shifts post-election. If there are changes to tax laws, lending policies, or housing affordability schemes, adjust your strategy accordingly.
• Pay attention to interest rates and supply trends. These factors will determine property prices far more than who is in power.

In my mind, we should all be stayed informed, but don’t let election fears dictate our decisions.

About Michael Yardney Michael is the founder of Metropole Property Strategists who help their clients grow, protect and pass on their wealth through independent, unbiased property advice and advocacy. He's once again been voted Australia's leading property investment adviser and one of Australia's 50 most influential Thought Leaders. His opinions are regularly featured in the media.