As the 2025 Federal election approaches, housing affordability has become a central issue for Australian voters. With growing concerns about the rising cost of living, high interest rates, and limited housing supply, both major political parties are grappling to propose solutions. Understanding the varying affordability challenges in different federal electorates is crucial for both voters and investors looking to understand the impact of potential policy changes on the housing market.

Election Looms Large: Housing Affordability Takes Centre Stage

Housing affordability remains one of the most pressing topics ahead of the Federal election, with political leaders proposing measures to alleviate the housing crisis. As voters look for solutions, it’s essential to consider the challenges faced by different regions. While election promises may provide short-term relief, most economists agree that real change will require tackling the underlying issues, such as the long-running housing supply shortage.

CoreLogic’s recent analysis of housing affordability reveals that the issue is not only a national concern but also one that varies greatly depending on location. Some areas face significant challenges in terms of property ownership, while others show more favourable conditions for both buyers and renters. For investors, understanding these dynamics can be key to making informed property decisions in the lead-up to and following the election.

Unaffordable Markets: Sydney Leads the Way

As of December 2024, the most unaffordable electorates for homebuyers were found predominantly in Sydney. With skyrocketing dwelling values, electorates like Bradfield (which includes North Sydney and Hornsby) have seen a dwelling value-to-income ratio of 16.5—an indication that purchasing a home in these areas is becoming increasingly out of reach for average households. In fact, Sydney’s dominance in housing unaffordability is a long-standing trend, with the area consistently ranking among the least affordable markets for several years.

For property investors, this trend presents both challenges and opportunities. High unaffordability levels in these electorates often drive rental demand, as more people are pushed to rent rather than buy. While the housing market may be tough for buyers, it remains a strong area for rental investment, particularly in areas where population growth and demand for rental properties continue to rise.

The data also highlights a stark contrast between major cities and regional areas. For instance, Richmond in Northern New South Wales recorded the highest dwelling value-to-income ratio for regional markets at 12.4, largely due to the booming coastal areas like Byron Bay. What’s interesting here is that before the pandemic, Richmond ranked much lower in terms of unaffordability. However, property value growth over recent years has shifted the market significantly, making it one of the top 5 most unaffordable areas for potential homeowners.

In contrast, regional Queensland offers more affordable options, with areas such as the electorates around Brisbane still presenting relatively balanced affordability metrics. This is good news for investors who are looking at emerging regional markets where there may be more opportunities to capitalise on growth without facing the steep competition and prices found in cities like Sydney or Melbourne.

The Impact of Rental Affordability: Sydney vs Regional Queensland

Rental affordability is another key issue, with regional areas again showing the most significant challenges. In markets like Richmond and McPherson on the Gold Coast, renters are facing increased pressure, as households must dedicate upwards of 45% of their income to secure a rental property. This suggests that affordability is becoming increasingly difficult for those relying on rental properties, which could further drive up demand in areas where rental affordability remains healthier.

Interestingly, regions like outer Melbourne and the ACT stand out as some of the most affordable rental markets. Greenfield supply in Melbourne’s outer west and strong supply in the ACT have kept rents relatively low, despite a significant increase in rental prices over the past few years. For investors, these areas offer more affordable entry points, and they may continue to perform well due to strong supply responses.

What Does This Mean for Investors?

As housing affordability continues to dominate political debates, property investors should keep a close eye on how the policies proposed during the election campaign might influence various markets. While some markets may become less affordable for first-time buyers, they often present opportunities for investors in the rental sector, especially in cities with high demand and low vacancy rates.

Investors should focus on areas where the supply-demand imbalance is likely to continue pushing rental demand, such as Sydney’s inner-city areas and regional hotspots like Richmond and McPherson. Additionally, understanding the balance between property values and rental yields in more affordable areas, such as parts of Melbourne or regional Queensland, can provide long-term growth potential without the prohibitive entry costs of major city markets.

Conclusion: The Federal Election and Housing Affordability – A Market to Watch

As the Federal election approaches, housing affordability will continue to be a major issue for both voters and property investors. While there is no one-size-fits-all solution, understanding the varying affordability trends in different electorates can help investors make strategic decisions. By focusing on areas with tight supply and increasing rental demand, investors can position themselves for success, regardless of the election outcome.

With housing affordability remaining a key issue in the federal election, it’s crucial for property investors to stay informed about the political landscape and how proposed policies may affect both homeownership and rental markets. Those who understand these trends can use this knowledge to identify opportunities and secure profitable investments in the years to come.