Now that the election's over there are no more excuses: Terry Ryder

In keeping with the media’s habit of asking dumb questions and coming up with dumber answers, the (mis)information channels are alive with speculation about what the election result means for real estate.

The short answer is that the election will have no direct impact on property markets. Indirectly, the election of a new government will tend to be positive, because an emphatic change of government usually boosts public sentiment.

The reality is, though, that real estate markets were already rising before the weekend poll and the election outcome won’t change that.

This week’s new data on housing finance helps to illustrate the point. The figures from the Australian Bureau of Statistics show that lending for residential real estate purchases rose, again, in July. No surprises there – housing finance has been climbing month by month since late last year.

The value and the number of loan commitments to buy dwellings have been steadily rising since the last trough in December 2012. The number of loans for owner-occupier housing has increased from around 44,000 last December to above 52,000 in July.

The figures show that investors now comprise about 36% of the buying market. That’s noteworthy for two reasons: one, a symptom of rising markets is greater activity from investors, who usually make up about 30% of buyers; and two, despite their rising prominence, investors continue to be a minority in the market.

The major forces in residential real estate include first-time buyers (currently around 14% of the market) and investors (about 36%). The most important component is the third force, which comprises the remaining 50%. These are the next-time buyers – i.e. home buyers other than first-home buyers.

They’re the people who drive real estate markets and cause prices to rise over time. So those who stridently claim that grants to first-home buyers cause prices to rise or that negative gearing tax benefits are to blame because they help investors, are well wide of the mark.

Markets are recovering and price growth is back because next-time buyers are active again and investors, who collectively are followers not leaders, are getting busy as well.

Consumers have been encouraged by improving affordability, thanks to higher incomes, lower interest rates and the two years of price decline that preceded the recent recovery. Housing affordability is at its best in 10 years, according to latest Housing Affordability Report from AdelaideBank and the Real Estate Institute of Australia. It says that the last time affordability was this good was in the June quarter of 2003.

All of this was happening before the federal election and occurred despite the widely-held view that an election causes stagnation. People who run bad businesses or struggle to make investment decisions have used the election as a scapegoat. They’re deluding themselves.

We’re in a growth market and have been since late last year. The election result changes little.

Now that the distraction is out of the way, let’s just get on with it. We have a growing economy, low unemployment and attractive interest rates.

You’ve run out of excuses, people.

Terry Ryder is the founder of and you can contact him at or

Terry Ryder

Terry Ryder

Terry Ryder is the founder of

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