The Australian Property Market at the Crossroads: Election Policies and Their State-by-State Impact

As Australia approaches the 2025 federal election, the property market stands as a pivotal issue influencing voter sentiment and policy debates. Housing affordability, supply shortages, and taxation policies are at the forefront of discussions, with potential implications varying across states. This article examines the proposed housing policies of major political parties, their projected impact on the property market, and identifies which states are likely to be most affected.

Current State of the Australian Property Market

Australia is facing a significant housing shortfall, with projections indicating a deficit of approximately 462,000 homes in capital cities by 2029. This shortage is expected to exacerbate rental prices and housing affordability nationwide. Factors contributing to this crisis include delayed land releases, inadequate development incentives, and insufficient supporting infrastructure.

Election Policies on Housing

• Coalition's Superannuation Housing Policy: The Coalition proposes allowing first-home buyers to withdraw up to $50,000 from their superannuation funds to purchase a home. However, the Parliamentary Budget Office estimates this could lead to an additional $1.4 billion burden on taxpayers due to increased reliance on the aged pension, as individuals may deplete their retirement savings.

  • Pro: Provides immediate access to funds for first-home buyers, potentially increasing home ownership rates.

  • Con: Risks inflating house prices, particularly in high-demand areas, while reducing retirement savings for future generations.

• Liberal’s Housing Supply Reforms: The Liberal Party is prioritizing housing supply expansion by fast-tracking land releases and streamlining zoning approvals. They argue that reducing planning delays will increase housing availability and ease affordability pressures. Additionally, the party has pledged to maintain negative gearing and capital gains tax discounts to encourage investment in rental housing.

  • Pro: Encourages property development and increased housing supply, which could help alleviate affordability pressures in the long term.

  • Con: Critics argue that maintaining tax incentives for investors may further drive up investor demand, making it harder for first-home buyers to compete.

• Labor's Home Equity Access Scheme Enhancement: The Australian Labor Party plans to enhance the Home Equity Access scheme by allowing higher earners to qualify for shared home ownership with the government. The Help To Buy program, now with an additional $800 million, will be available to almost all first-home buyers, allowing those earning up to $100,000 a year to purchase homes up to $1.3 million.

  • Pro: Makes home ownership more accessible for first-time buyers by lowering deposit requirements.

  • Con: Government-backed schemes could push up property prices in already competitive markets, making housing less affordable in the long run.

State-by-State Impact

• Queensland: The state has experienced a median house price increase of up to 30% since 2022, affecting every electorate. Affordable housing is emerging as a pivotal election issue, particularly for young people in inner-city areas.

• New South Wales and Victoria: Both states are projected to face significant housing shortfalls, contributing to severe affordability issues. Meeting housing targets could save renters in these states hundreds of dollars weekly and add substantial value to the economy over five years.

• South Australia: Adelaide’s rapid population growth has intensified housing demand, particularly in affordable suburbs. Renters and first-home buyers are facing increasing competition, with housing supply failing to keep up with demand. Proposed infrastructure and land release initiatives could play a key role in easing affordability concerns.

• Western Australia: With Perth experiencing some of the fastest house price growth in the country, affordability remains a critical issue. High interstate migration and a shortage of new developments have further strained the market. Election policies focused on boosting housing supply and rental availability will be crucial in WA.

• Tasmania: Hobart has one of Australia’s tightest rental markets, with vacancy rates below 1%. Housing shortages, particularly in regional areas, have pushed prices up significantly. Government interventions aimed at regional housing development could provide some relief.

• Northern Territory: Darwin’s property market has been more volatile, with rental shortages and slow new housing construction. The NT government is calling for increased federal investment to support infrastructure and housing projects to attract workers and ease rental pressures.

• Australian Capital Territory: Canberra’s high median house prices and strict land release policies have led to affordability challenges, particularly for first-home buyers. The election could see increased discussions on urban development policies and rental assistance programs for the territory.

The 2025 federal election presents a critical juncture for Australia’s property market. The proposed housing policies by major political parties aim to address affordability and supply shortages. However, their effectiveness will vary across states, influenced by local market conditions and specific challenges. Voters and stakeholders must assess these proposals to ensure they promote sustainable solutions tailored to each region’s needs.