Home Business Election 2019 Why the property slump could cost Labor the election

Why the property slump could cost Labor the election

All eyes on housing prices and policies.

Jack Derwin

Digital Journalist, Your Money

With a federal election called for 18 May, both parties have just a little over five weeks to sure-up votes and woo the electorate.

As the economy looks set to be the core issue, the incumbent Coalition government will campaign on a promised surplus and steady management while Labor promises larger reforms.

Read: Here are the issues that election 2019 will be fought on

“Interestingly we know more about Bill Shorten’s policies than we do about the governments. Bill Shorten has negative gearing on, the reduction in the capital gains discount, changes to the refunds to self-funded retirees,” Money Talks host Peter Switzer told Trading Day.

“These are the standout policies that we know and that he says will deliver certain amounts of revenue that will make his [other] promises more sellable or payable,” he added.

However, while those policies were announced at a time when property markets were running hot and the economy was growing, both those have now shifted, a fact the government might capitalise on.

“On the flip side, we’ve listened to the prime minister today and he’s continually talked about his economic record. The political record has been terrible, revolving doors of prime ministers. We probably don’t need politicians, all we need is a government that makes sure the economy goes OK,” Switzer said.

“That’s been the case until the last two quarters where we’ve slowed down as the world slows down and that’s part of the cause,” he explained.

Sluggish wage growth and weak household spending amid global uncertainty saw the International Monetary Fund (IMF) slash Australia’s growth forecast from 2.8 per cent to 2.1 per cent in 2019.

That combined with falling house prices in major markets will only underline economic concerns in the electorate, possibly undermining confidence in the Labor party’s policies like negative gearing.

Read: How will budget 2019 affect the property market?

“The housing market is clearly in trouble, prices are falling, dwelling approvals haven’t been strong and all those things probably imply the housing market is our Achilles heel at the moment,” Switzer said.

“I think probably the best thing Labor could have done is come out and said, ‘these are policies, we support them but we will not introduce them until the economy can actually take it’,” he explained.

Instead, Labor may have underestimated electorate concerns by announcing 1 January 2020 as the introduction date for negative gearing changes.

“That really shocked a lot of people.”

Watch the full interview with Peter Switzer above and visit our election page for more coverage. 

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