30 Apr Election 2025: How Party Policies Could Affect Property Prices and Investment Markets

Election 2025: How Party Policies Could Affect Property Prices and Investment Markets

Disclaimer: This article is not intended to suggest how you should vote. There are many personal, social, and economic issues to consider at election time. The following is a neutral analysis of how the key economic policies proposed by the major parties may impact the Australian property and share markets. It does not constitute personal financial advice.

With the 2025 federal election approaching, both the Labor Government and the Coalition Opposition have released key economic proposals to address housing affordability, cost of living pressures, and taxation reform. While these announcements are part of broader platforms, this article will focus solely on how the proposed economic policies could influence Australian property prices and equity (share) markets, particularly for households earning around $200,000 combined annual income.

1. Property Prices – Demand vs Supply in Focus

Labor’s policy approach targets the supply side of the housing market, including:

• A $10 billion investment to build 100,000 new homes,
• Expansion of the First Home Guarantee scheme, allowing 5% deposits without Lenders Mortgage Insurance (LMI) for eligible buyers (income cap of $200,000 for couples).

By directly increasing supply, Labor’s housing strategy aims to reduce long-term price pressure, especially for first-home buyers.

The Coalition’s policy is more focused on stimulating demand:

• Introduction of a mortgage interest tax deduction for first-home buyers of new builds (on the first $650,000 of a loan),
• Available to couples earning up to $250,000 combined.

This would provide a significant tax saving (around $13,000 per year per household) for eligible buyers. However, increasing demand without addressing supply may drive prices higher, particularly in already competitive regions.

National Consideration:

• The average Australian house price is now around $925,000 (as of early 2025).
• A typical 80% loan on that amount is $740,000 — meaning only part of the loan would benefit from the Coalition’s mortgage deduction cap.
• This may help first-home buyers in regional or outer-metro areas more than those in higher-priced capital cities.
• If property demand spikes, prices could rise further, eroding the affordability gains of the tax deduction itself.

Takeaway:

• Labor’s housing plan may provide longer-term stability by addressing supply.
• Coalition’s plan may stimulate short-term demand but risks pushing prices up if supply doesn’t keep pace.

2. Equity Markets – Immediate Boost vs Long-Term Stability

Both parties are promising tax relief, but the Coalition’s offering is larger and more immediate:

• One-off tax offsets of up to $1,200 per person,
• Mortgage deductions may increase housing construction and discretionary spending.

These measures could boost short-term corporate earnings, particularly in sectors such as:

• Banks (increased lending),
• Construction and building materials (infrastructure and housing demand),
• Retail and consumer goods (from extra cash in households).

Labor’s approach is more moderate and long-term focused:

• Tax cuts targeted to low and middle-income earners, beginning in 2027,
• Investment in housing and Medicare aimed at supporting long-term productivity and cost of living.

This approach is less stimulatory in the short run but more likely to bring inflation under control, potentially allowing the Reserve Bank to lower interest rates sooner — a key driver for equity market valuations over time.

Takeaway:

• Under a Coalition government, we may see a short-term market rally, especially in financials, retail, and property-linked stocks.
• Under a Labor government, markets may benefit more gradually from rate cuts and economic stability, supporting long-term growth sectors such as healthcare, infrastructure, and technology.

Final Thoughts

• If your view leans toward short-term market movements, the Coalition’s proposals may deliver a temporary boost to both housing and equities.
• If your focus is on long-term affordability, sustainable economic growth, and lower interest rates, Labor’s policy mix may be better aligned with those outcomes.

As always, the broader economic environment, including global growth, inflation trends, and Reserve Bank policy, will play a major role in determining the actual outcomes. But policy direction does shape momentum — especially when it comes to confidence in property and markets.

If you’d like to understand how the election might affect your own financial strategy or portfolio, feel free to get in touch for a personalised discussion.

Important information and disclaimer

The information provided in this document is general information only and does not constitute personal advice. It has been prepared without taking into account any of your individual objectives, financial solutions or needs. Before acting on this information you should consider its appropriateness, having regard to your own objectives, financial situation and needs. You should read the relevant Product Disclosure Statements and seek personal advice from a qualified financial adviser. From time to time we may send you informative updates and details of the range of services we can provide.

FinPeak Advisers ABN 20 412 206 738 is a Corporate Authorised Representative No. 1249766 of Spark Advisers Australia Pty Ltd ABN 34 122 486 935 AFSL No. 458254 (a subsidiary of Spark FG ABN 15 621 553 786)