Investor Sentiment and the Federal Election

With the upcoming federal election, one could anticipate that the market’s transaction cogs will soon begin turning again. Historically, Australian federal elections introduce a temporary pause in property investment activities, primarily due to investor caution and uncertainty. In the lead-up to the election, both buyers and sellers often adopt a “wait-and-see” approach, delaying key decisions until the political landscape becomes clearer.

However, this hesitation is typically short-lived. Investment activities tend to resume to normal levels almost immediately after election outcomes are known. This recurring pattern highlights that it is investor psychology—rather than any substantial economic disruption—that drives the slowdown in market activity during election periods. Analyses of past election cycles consistently show that while transactions may dip temporarily, the market stabilises quickly, and confidence returns as political uncertainty lifts.

As such, with the imminent conclusion of this election, there is a strong basis to expect a reinvigoration of transactional momentum across the property sector in the weeks ahead.

Interest Rate Trends and Capital Deployment

Recent movements by the Reserve Bank of Australia (RBA) indicate a clear downward trend in interest rates, with further reductions anticipated in the near term. The RBA is scheduled to meet again next Tuesday, and some economists are predicting another rate cut following last month’s reduction. Forecasts vary, but there is a general expectation of an additional 25 to 50 basis points cut, irrespective of which political party forms government this weekend.

Lower interest rates directly decrease borrowing costs, making property investments more attractive and potentially unlocking significant amounts of sidelined capital. This environment fosters renewed investor confidence, encouraging both institutional and private investors to re-enter the market in search of yield and capital growth opportunities across a range of property sectors.

Already, the impact of monetary policy shifts is evident. The recent rate cut in March 2025 contributed to a 0.4% uplift in national property prices, highlighting a notable improvement in buyer sentiment. Should further rate cuts materialise as forecasted, the combination of political certainty post-election and a more accommodative monetary policy is likely to drive increased transactional activity and capital deployment across the property market.

Global Economic Pressures and Market Opportunities

Internationally, economic pressures—such as tariffs imposed by major economies—have heightened the risk of a global recession. While this scenario presents challenges, it also creates unique opportunities for investors. A narrowing gap between buyer and seller expectations can lead to more favourable acquisition terms, particularly for those prepared to act decisively in a cautious market. Recent shifts in global trade policies have further created conditions where strategic investments can yield significant returns, as sellers adjust to new economic realities.

Australia’s property investment market, widely regarded as a “safe haven” for international capital, is particularly well-positioned in this environment. The country’s strong government institutions, transparent regulatory frameworks, and stable economic fundamentals offer a level of security that is highly attractive to global investors seeking refuge from volatility elsewhere. As global uncertainty persists, it is a distinct possibility that foreign investment into Australian property will increase, reinforcing transactional activity across sectors such as hospitality, commercial, and industrial real estate.

Impact on the Hospitality Property and Business Sector

The hospitality sector—spanning hotels, pubs, motels, caravan parks, and backpacker accommodations—is well-positioned to capitalise on current economic conditions. Falling interest rates, coupled with improving investor sentiment, are driving transactional momentum and supporting upward pressure on asset valuations.

This trend is reflected in several significant deals, including those brokered by Savills. Notably, the recent takeover of the Eumundi Property Group by SEQ Hospitality highlights the growing appetite for pub portfolios in Queensland. Similarly, Savills facilitated the sale of the Bannisters Portfolio, a high-profile coastal hospitality group, underscoring demand for boutique, lifestyle-driven assets. These transactions complement other major deals in the sector such as Redcape’s purchase of Maeva Hospitality — including several Sunshine Coast pubs — for c$80 million.  

Together, these transactions demonstrate that the hospitality property market continues to attract significant capital, offering a compelling blend of resilience, income stability, and growth potential despite broader economic headwinds.

The convergence of several key factors—political certainty following this weekend’s federal election, the Reserve Bank of Australia’s shift towards a more accommodative interest rate environment, and Australia’s enduring status as a global investment safe haven—has created highly favourable conditions for the hospitality property sector.

As investor sentiment rebounds and capital that has been sitting on the sidelines is redeployed, the hospitality market is well-positioned to benefit from renewed transactional momentum. Recent major deals across hotels, pubs, and lifestyle-driven assets already signal strong underlying demand, and with borrowing costs likely to fall further, this momentum is set to accelerate.

Despite broader global economic pressures, the resilience, income stability, and growth potential offered by Australian hospitality assets continue to attract both domestic and international investors. As a result, the sector is poised not only for an uptick in sales activity but also for sustained property price growth in the months ahead.

Disclaimers:

The postings by any individual on any blog do not necessarily represent the position of Savills, its strategies or opinions.