The upcoming New Zealand election, scheduled for October 14th, has left many people wondering about its potential impact on the property market. In this article, we'll delve into the insights shared by Ed McKnight, an economist at Opes Property Partners. By analyzing data from past elections and understanding historical trends, we aim to provide you with a clear perspective on what to expect in the property market leading up to and following this year's election.
Understanding the Property Market Before and After an Election:
Comparing to the 2008 Election: In the context of past elections, the 2008 election stands out. During this time, the New Zealand economy was in recession, and property prices were falling, mirroring some of the current economic conditions.
Why Fewer Properties Sell Before an Election: The primary reason for decreased property sales before an election is the uncertainty it brings. Buying a property is a significant financial decision, and elections introduce an element of unpredictability. People tend to hesitate when they are uncertain about the direction the country might take. However, after the election results are clear, confidence typically increases, and buyers become more comfortable with the new government's policies, regardless of its political affiliation. Property Prices: Surprisingly, the election itself does not seem to have a significant impact on property prices. Property prices tend to increase by approximately 6% to 7% annually. Consequently, 12 months before an election, property prices are about 6% to 7% lower than the average, while 12 months after the election, prices tend to be 6% to 7% higher than the average. Opportunities for Property Buyers and Investors: As more buyers and investors tend to enter the market after an election, competition for properties typically intensifies during the post-election period. Therefore, if you're planning to buy a property within three to six months following the election, be prepared for increased competition. Conversely, before the election, the market might be quieter, potentially providing an opportunity to negotiate a better price or find a favorable deal. Conclusion: While the New Zealand election does influence property sales, it doesn't seem to have a significant impact on property prices. Understanding these trends can help buyers and investors navigate the market effectively, whether they are looking to make a purchase before or after the election. Regardless of the election outcome, the property market in New Zealand is expected to remain resilient and continue its long-term growth trajectory.
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