How elections impact property values

Prime Minister Kevin Rudd’s recent announcement of the Federal Election has brought into question the impact that elections have on property values, with one data provider suggesting that the elections have more of an affect than most would think.

Onthehouse.com.au reveals that in the 11 federal elections since 1978, seven of the elections saw the rate of house price growth slow for the three months leading up to the election, but data also shows that when growth does slowdown prior to an election it is followed by a rise in growth rates afterward.

The reverse was true for years where growth rates did not slow prior to an election. In these cases, price growth rates went into a slump directly after the election.

Onthehouse.com.au spokesperson John Edwards said that the data pointed to a clear trend.  

“When taking the data into consideration, elections have clearly had an impact on the property market. We took Sydney data because it was our most robust, but when mapping on a national basis the historical data followed a similar pattern,” Edwards said.

Historical data on Sydney house values since 1949 shows that:

• Under Labor Prime Ministers, the average growth in the housing market was 8% p.a.
• Under Liberal Prime Ministers, the average growth was 6.9% p.a.
• Julia Gillard was in power during the slowest ever period of price growth, with house prices falling in real terms for Sydney housing
• Although housing values fell in real terms under Labor, this meant that the affordability for potential house-buyers improved
• The Prime Minister who saw the largest annual rise in house values over their term of office was Gough Whitlam (1972 – 1975)

Edwards added: “Sir Robert Menzies can probably be credited with achieving the best long term sustainable growth rate which saw house prices grow at a rate which kept housing relatively affordable, but provided reasonable growth and will not have distorted the total yield mix. Under the current government the market has had its lowest growth rates since 1949. While this is not good for house owners, it has meant that buyers are more able to enter the market.”

Source: onthehouse.com.au / Residex