Real estate prices are rising, despite the supposed election uncertainty

Terry RyderDecember 7, 2020

If the glass-half-empty members of society are right, prices aren’t rising right now.

 
But prices are rising, quite strongly in most of our biggest cities.

 
And it shouldn’t be happening.

 
It’s winter and there’s an election coming up. Markets are supposed to be stagnating.

 
They’re not scheduled to spark up until September, when it’s spring and the election is out of the way.

 
Welcome to the wonderful world of real estate furphies.

 
There’s no limit to the number of people telling us that the impending federal election is causing all kinds of uncertainty – and that real estate markets don’t grow when elections are in the offing.

 
But our real estate markets are growing. They’re growing more right now, in mid-winter with an election looming, that at any time in the past three years.

 
There are more positive indicators of real estate growth than at any time since 2010.

 
The Australian Bureau of Statistics has just published its House Price Indexes, which show an average 2.4% growth in capital city Australia in the June quarter and a 5.1% annual rise. This is an almost identical result to the findings of Australian Property Monitors and RP Data, published earlier.

 
All eight capital cities now have house price levels higher than a year ago. Only Hobart failed to deliver solid growth in the June quarter, according to the ABS numbers.

 
The ABS figures suggest prices have grown in the past three quarters, despite all the economic-election uncertainty that the media keeps chattering about.

 
The latest edition of the Homebuyer Confidence Index by mortgage insurer Genworth shows a significant rise in sentiment by real estate consumers, apparently oblivious to the fact they’re meant to be paralysed by insecurity and indecision because there’s an election on the horizon.

 
The home finance figures published by the ABS this week show yet another steady rise in the number of loans by owner-occupiers. Lending has been rising steadily since the start of the year, right throughout that period when Julia Gillard made a very early announcement of a distant election, then was deposed by Kevin Rudd, who then kept everyone guessing about when the election would be, until quite recently.

 
Why any of this matters to real estate markets remains a mystery.

 
I believe the chatter about economic uncertainty and election dampeners comes largely from those who are either (a) people who run poor businesses; or (b) investors who are looking for an excuse to avoid making decisions; or (c) economists who can’t think of anything original to say.

 
Ignore them all and just get on with it.

Terry Ryder is the founder of hotspotting.com.au and you can contact him at ryder@hotspotting.com.au or twitter.com/hotspotting.


Terry Ryder

Terry Ryder is the founder of hotspotting.com.au.

Editor's Picks