Elections and property markets

Elections are always a time for pause for the property market.

Traditionally agents will either work to get property sold within the first weeks of the campaign or switch them to private sale, with a lot of auctions postponed until after the election. This year it seems that pause came earlier, sparked by the Trump tariff fiasco. The combined effect has certainly put the jitters into an already fragile market and it is fair to say we are now in a market holding patten.

I attended several Auctions this weekend, with most passed in, and for those unfortunate enough to have been caught in this unforeseen turmoil, I sympathise. Traditionally this phase is short lived and this market will continue to bounce back.

On average across the Geelong, Surf Coast and Bellarine, the numbers are painting an interesting picture:

· 12-month median change in house price is now at -1.38 per cent, slightly improved from -1.70 per cent a few weeks ago suggesting that we have had a positive upswing since February

· The number of suburbs in our region that have moved into the green, i.e. positive annual growth, has increased from four to 10, and

· The number of days on market has gradually started to creep down.

However, the coastal markets are still in a declining market cycle. One of the metrics I look at is the number of properties on the market for sale and compare that to the average sale rate per month in that area. For example, Queenscliff has 37 properties for sale, with an average sale rate of only two properties per month it will take 18 months to clear existing stock. It is no surprise that the next four most over supplied markets are Portarlington (19 months of stock) Point Lonsdale (15), Anglesea (15), Ocean Grove (10). In fact, between Ocean Grove and Torquay, there are nearly 500 properties on the market for sale.

Most urban Geelong markets have now entered the recovery phase. Low supply characteristics are evident in areas such as Geelong West (three months of stock), Grovedale (three), Belmont (three), and this corresponds to the median house price recovery with all three experiencing positive growth over 12 months.

One thing becoming more certain is the RBA rate cut, the markets are now pricing in 80 per cent chance of a rate cut on May 3, and this could be a big one, 0.5 points. Likely followed by another one in July, and again in September. This will certainly bring back a lot of confidence, and in my view provide a springboard for a post-election recovery.

What I find interesting about this election cycle is the housing policies that are being promised by respective parties. Any economist will tell you that value is driven by the relationship between supply and demand. However, constant artificial tinkering by successive governments has impacted the ability for supply to be added to the market, hence increased demand and increased price, lowers housing affordability. This artificial tinkering includes things which stop the ability for the market to increase supply, I speak of the 55 property taxes in Victoria, plus increased construction prices mostly driven by increased labour costs.

None of the current political parties are going to deal with these issues. Instead, all have promised to put more cash into the market, via first home buyer incentives or buying homes. This will only increase demand and does not deal with supply. So yes, no matter which party gets in, house price recovery is looking certain to continue in 2025. From my point of view, the quicker we can put this most boring election campaign in the rear vision mirror the better. Happy voting.

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