With the Federal election looming, you may be wondering if the federal election will affect house prices or the housing market in general.

In the US, there’s a clearer connection between election cycles and housing prices. House prices typically dip in the months leading up to a Presidential election south of the border. A study by Meyers Research found that median new home sale activity drops 15% from October to November in an election year, versus a more normal 8% drop in non-election years.

There doesn’t seem to be any similar research in Canada, so it’s hard to find any trends.

There may be some insights in the platforms of the various parties, so let’s look there:

Conservative Plan

• Create one million homes in the next three years by repurposing 15 per cent of federal buildings
• Banning foreign investors who live outside the country from buying property for at least two years
• Making changes to the mortgage stress test.
• Allow developers to defer capital gains taxes if they reinvest in rental properties
• Implement longer, seven- and 10-year mortgages
• Remove the stress from renewal mortgages

Liberal Plan

• Invest almost $20 billion over 10 years in social infrastructure, specifically affordable housing
• Invest $125 million per year in tax incentives intended to increase and the supply of rental units across the country
• Implement a national tax on vacant residential properties owned by foreign investors

NDP Plan

• Build 500,000 affordable housing units, and at least half will be complete within the next five years
• Waive the federal portion of the GST/HST on the construction of new affordable rental units
• Implement a 20 per cent Foreign Buyer’s tax on the sale of homes to individuals who aren’t Canadian citizens or permanent residents.

A lot of what they are suggesting is around three things:

1. Creating more supply in the market
2. Adding more affordable rental properties
3. Discouraging foreign investment

All of these things could have downward pressure on house prices, you would think. But one of the biggest drivers of housing market activity (interest rates) is largely undiscussed. So, will the federal election affect housing prices?

In an article on CBC’s website, Martin Ting, a Vancouver-area financial advisor says he’s “a bit cynical when it comes to government polices on housing affordability. This issue has been around for several elections and, from an affordability stance, things have gotten worse, not better.”

He may be right because it’s more Provinces and municipalities that have the power to directly impact the housing market.

So, in the end, the federal election may not have much impact on house prices at all. What do you think? Will one party be better for the market than another? Is there a buyer’s party and a seller’s party? Let us know what you think in the comments.