How Will the New Zealand Election Impact the Property Market?

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:

• Pre-election Property Sales: Historically, New Zealanders tend to buy approximately 12% fewer properties before an election compared to after. This translates to a reduction of around 6% in property sales before the election.
• Post-election Property Sales: In contrast, the months following an election see a surge in property sales. Within three months after the election, there is a notable increase, and this trend continues for up to 12 months post-election. During this period, property sales can rise by 6% to 7% compared to the average.
• Timing of Property Sales: Interestingly, property sales begin to decline around 10 months before an election and continue this downward trend until election day.
• Data Source: These insights are based on data gathered from nine elections between 1993 and 2017, excluding the 2020 election due to its uniqueness in the context of the COVID-19 pandemic. Opes Property Partners - www.opespartners.co.nz

​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.

• 12 Months Before the 2008 Election: The property market was still vibrant, with up to 30% more properties being sold compared to the average.
• Leading Up to the Election: As economic conditions worsened, property sales dipped, with up to 30% fewer properties selling than the average.
• 3 Months After the 2008 Election: Interestingly, the property market began to recover, and up to 20% more properties were sold compared to the average.

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.

​