The Impact Of The Federal Budget On The Housing Market
A Monthly Success Video from Australia’s Leading Property Market Analyst, John Lindeman.
Hello, it’s John here.
When I’m not researching housing markets around Australia, I’m to be found in my office here in Sydney where I do another type of research which is “desktop research”. One of the things I’ve been looking at recently is the Federal Budget and its implications to housing investors.
One of the main focuses of the budget was on housing affordability and some types of investors have been slugged. In particular, the foreign investors who now have to pay tax on vacant properties. Other levies also have been increased.
The biggest incentives are for first time buyers, with additions to their ability to raise deposits by being able to contribute to superfunds and so on. State governments are also introducing incentives which will help first time buyers. The problem with all of these incentives is that they are on the demand side. They don’t do anything to increase supply.
Now, if you’ve got $80K saved up as a deposit, you can go to the bank and say that’s 20% of a $400K house/unit. But, if these incentives raise your deposit capability to say $100k, suddenly, you can buy a house with $500K. What it means is it’s going to put the pressure on prices to go up particularly to first time buyer markets.
Another part of the budget also dramatically affects this market, particularly, in outer Sydney because the proposal to develop Badgerys Creek as a second airport is going ahead. Over $5B will be spent, it will create thousands of jobs in the outer-western area of Sydney, particularly places like Liverpool, Campbelltown, and Penrith are going to benefit. But, again, it’s on the demand side, it will result in increased housing prices in those areas.
Even though the Federal Government’s budget is making housing more affordable by increasing the deposits, it’s actually going to raise prices as well—which is good news for investors, but ultimately, not good news for the property market as a whole.
If you’d like to know more about which areas are likely to be affected, and when this is likely to happen, why not come along to one of Stuart Zadel’s events and hear me present. I’ll explain more about the impacts of the budget in detail.