As Australia gears up for a federal election on 3 May, property investors will be keeping a close eye on potential policy changes. While neither major party is proposing to remove capital gains tax discounts or other key investor incentives, the election could still have ripple effects on the market.

A continued focus on first home buyers

A key focus for both sides of politics is improving housing affordability, particularly for first-home buyers. While this could mean increased government incentives for new buyers, it’s unlikely to come at the expense of property investors. In fact, policies aimed at boosting housing supply—such as encouraging new developments—may eventually benefit the investment property market by increasing rental stock and stabilising prices.

Rental market pressures

According to PropTrack, rental prices have surged by 27% in recent years, while unit prices have jumped 38%. A significant portion of these increases stem from the post-pandemic market correction, allowing landlords to recoup some cash flow losses. Investors will be watching to see if rental growth continues, or if election policies—such as increased housing supply—help to ease pressure on the market.

The role of migration policy

One area where the election could impact investors is migration policy. While there has been public pushback on immigration, most Australians support skilled migration and maintaining international student visa numbers. For property investors, particularly those with rental properties in university hubs, a stable or increasing student population is crucial to maintaining demand. Any policy changes that restrict student visas could impact rental yields in those areas.

Why investors matter in the housing market

Despite some negative perceptions, property investors play a vital role in Australia’s housing market. The Australian Housing and Urban Research Institute reports that around 90% of property investors are small-scale, "mum and dad" landlords who provide essential rental housing[i]. With homeownership becoming increasingly difficult for many Australians, investors help fill the gap by supplying rental properties.

Additionally, the concept of "rentvesting"—where people rent in areas they want to live while investing in more affordable locations—has grown in popularity. Recent data suggests that 10-15% of renters in Australia are also landlords, showing that property investment isn’t just for the wealthy but is an important financial strategy for many Australians.

Stability in tax benefits

For now, it’s positive news that both major parties seem committed to retaining current tax incentives for property investors. Maintaining these benefits is crucial to encouraging investment, which ultimately supports rental supply and housing affordability.

Looking ahead

With the election now called for 3 May, property investors should stay informed about policy announcements. While no dramatic changes appear to be on the horizon, factors like migration settings, housing supply initiatives, and rental market conditions will continue to shape investment opportunities in the years ahead.

Are you considering investing in property? Stay tuned for updates from Raine & Horne as the election campaign unfolds.

 
[i] https://australianpropertyupdate.com.au/apu/how-investors-can-ease-the-rental-crisis#:~:text=With%20the%20Build%2Dto%2DRent,to%20as%20%E2%80%9Cproperty%20flipping%E2%80%9D.