What the 2025 federal election might do for real estate

It’s almost that time again, when our political parties battle it out for the public’s attention. The Australian federal election in 2025 is almost upon us, and the question we hear so often is, “How will the election impact property values?”

Such loaded questions frequently hit our inbox and our ears, with quick, simple answers scarcer to find than a major party solution to the current Australian housing crisis. So, where detail is required we are happy to oblige.

Here’s how this year’s federal election may influence the property market in Australia this year. 

Interest rates

It’s possible the Reserve Bank of Australia will wait until after the election to make any major interest rate cut announcements. This is the forecast by experts because their most recent meeting notes detailed a considerable volume of uncertainty with terms like, “Labour outcomes may prove stronger than expected…” and “There is a risk that any pick-up in consumption is slower than expected.”

All that said, the Big Four banks still predict a May rate cut is inevitable, with Commonwealth Bank even calling the decision a “done deal.”

The RBA is a separate body to the federal government, so the actual outcome of the election could only indirectly influence rate decisions. In this respect, interest rate decisions would depend on how, for example, the elected leader would handle future or existing trade tariffs, how their party might bolster or bludgeon the economy and, well, how they would handle a list of other economic influences that would take several blog posts to outline.

Taxation on property investments

In the lead-up to the 2025 federal election, discussions around negative gearing and capital gains tax have resurfaced. Some parties are advocating for changes that could affect investment property returns, such as placing limits on negative gearing and halving the capital gains tax discount from 50 per cent to 25 per cent (two policies that probably lost Bill Shorten his election bid in 2019).

While the current government has stated no plans to alter these taxation benefits, we feel that every investor should remain vigilant to any shifts in party positions both before and after the election’s victor is announced.

The housing crisis

The country has a housing crisis on its hands and there’s no clear solution to fix it—at least none presented by any of our major political parties.

Speaking with a friend the other day, he couldn’t believe a two-by-one unit in the heart of Como, WA, with an 82sqm footprint, was snapped up within six days of going on the market for $681,000. The friend was so shocked because he was the one to have built the unit when he was a developer back in the eighties. His guess was that it was worth around $300,000 (and it may very well have been prior to our most recent property boom).

This of course is anecdotal evidence of a) a lack of awareness many have about the state of our country’s housing market, and b) the unbelievable challenge most un-housed Australians have to get their family into a suitable home.

The government has understood the problem for a few years now (yet a several years too late), and it’s no surprise that both major parties have put a major focus on their agendas to address the problems of undersupply.

How each party plans to solve the housing affordability crisis in Australia

Labor is promising 100,000 new home builds over eight years, exclusively available to purchase by first-time buyers. New owners would only need to put down a 5 per cent deposit, without incurring lender’s mortgage insurance as a result of their sub-20-per cent contribution (required by most banks).

And the Liberals, in a proposal candidly described as “a joke” by political commentators, have suggested that tax deductible interest on loans against first time owners’ new builds will solve much of the problem. The deductible interest will be for the new loan’s first five years. This is accompanied by a proposal to allow a homebuyer to access up to $50,000 of their superannuation to put towards their first home.

Unfortunately, we feel that neither sets of fixes will help the crisis. In fact, there’s potential for both sets of promises to worsen the crisis.

Both “solutions” only serve to bolster the property market and send property values upwards (not a bad result if you’re a property owner). They will also bring players into the game, many of whom perhaps would’ve been able to find the funds to purchase a home. It’s just now their purchasing power is far stronger.

And it barely needs mentioning that neither party’s solutions will do a great deal for taxpayers, with Liberal’s policy being a very costly affair and Labor’s promises likely to fall short of its goal (given that the Australian government hasn’t met a housing target in recent memory).

Future of the property market after the 2025 federal election

As we’ve stated recently, federal elections typically only impact a property market in the very short-term. The lead-up to the election will potentially stall buyers and sellers from making decisions, with uncertainty being the mud that constricts property pundits from racing to act.

Uncertainty can be an investor’s kryptonite. Even if that uncertainty promises to be short-lived, it sometimes acts as an excuse to delay major decisions. As property investors with decades of collective experience, we completely understand this. Which is why we only make investment decisions when we’re either sure of the likely outcomes or when we completely understand the risks of investing in a particular property.

We’ve invested in real estate in nearly every possible stage of the investment cycle, from global financial crises and pandemics to downturns and property cycle peaks. Our dedicated team knows how to uncover opportunities and reveal the risks of an investment by completing thorough due diligence investigations. And we believe this is how investors should operate: sharpening their axe before taking a swing. After all, it’s worked for us, and our investors, time and time again.

At Properties & Pathways, we offer exclusive investments throughout the year. And we’re always on the lookout for new investors to join us in co-owning premier real estate through expertly managed property funds.

Want more information on how you can partake? Contact us today or subscribe to receive our investment updates.