colinrealestate

It is a question that I have often heard asked, as well as
being a regular explanation made when laying the blame for a
period of quieter sales leading up to the general election.
Using REINZ property sales statistics covering a total of 7
general elections held over the past 22 years, I found on
average, general elections depress property sales as 5 of the
8 elections caused property sales to decline as compared to
normal. However there is no real consistency.
Without a convincing answer, I reflected on the impact
economic sentiment has on the property market at the time of
each election. I plotted these variances to the norm for the 3
months run up to each election against the GDP trend from
Reserve Bank data.
Now in my view this correlation makes sense and aligns the
election to the cycle of GDP as follows:
1993 – GDP on a surge, economic optimism = 14% rise in
relative sales
1996 – GDP declining, economic pessimism, compounded by
first MMP election = 19% decline in relative sales
1999 – GDP starting recovery from Asian crisis, economic
caution = 7% decline in relative sales
2002 – GDP cautious recovery from post 2001 falls, economic
caution = 2% decline in relative sales
2005 – GDP declining, economic caution = 1% decline in
relative sales
2008 – GDP collapsing, economic pessimism = 5% decline in
relative sales
2011 – GDP recovery, growing economic confidence = 3%
rise in relative sales
It would be safe to say that not surprisingly the impact of an
election on the property market is more a reflection of the
economic confidence at the time than any across- the-board
view that elections dampen property markets.
As to September 2014 well with one month’s data in the
system, I am sorry to say for all those looking to blame the
election for a dampening of sales results – doesn’t look like it.

Filed under: REAL ESTATE