The 2019 Federal Budget proudly delivered news of a surplus of more than $7 billion.
Whilst ambitious in nature, first home buyers should gear up to feel the burn BUT with some undertones of stability and sustainability, the property market could get the boost it’s been waiting for.
Property commentator and valuer, Anna Porter of Suburbanite welcomes the changes for investors and is positive the budget will help turn the property market around.
“The Budget surplus promises will be a boost to general sentiment in the property sector as the confidence feeds off policies and promises,” says Ms Porter.
“There are no wild cards here for the property market, but instead an undertone of stability and sustainability through job creation and a $100 billion infrastructure spend, both of which will underpin the property market throughout the country.”
Treasurer Josh Frydenberg has highlighted some winners, but there have been some losers along the way also.
“The winners here are the regional markets with a focus on regional infrastructure spend, upgrades to regional hospitals and a robust drought package,” explains Porter.
“This is very likely to attract the more speculative property investors to buy up in regional areas that are earmarked for infrastructure spend, well in advance of anything breaking soil. Which will offer a more immediate boost to those regional property markets.”
“The real losers here are the first home buyers with nothing in particular for them in the financial stimulus,” warns Porter.
“They have somewhat tried to address this indirectly by focusing on a proposal of the fast trains linking major CBD’s to more affordable satellite cities,”
“One would imagine this will be attractive for first home buyers to get into more affordable housing where they can still access employment. However, this proposal to put in a fast train from Wollongong to Sydney, Geelong to Melbourne, Brisbane to Sunshine Coast and a few other regional hubs could in fact have the opposite effect and boost prices in these areas thus further pricing out first home buyers,” explains Porter.
“It will be a boost to those economies and in turn the real estate market, but we certainly won’t see an immediate impact of this,” projects the Suburbanite CEO.
“The real surprise package here is the $2 Billion package for small/medium business (classified as businesses up to $50 Mil turn over) to have better access to funding and finance options,” says Porter.
“Currently many SMSE in Australia use the equity in their own home to fund their business growth and activities, effectively using their home loan as a business line of credit. This makes it prohibitive for business owners to upgrade the family home or buy investment properties when their equity is tied up in the business, as opposed to being used for property decisions,”
“Our experience is that SMSE owners would prefer to use their equity to upgrade their home, renovate or invest but they just don’t have any other good lending options to support their business activities. If this funding package solves that problem then this will allow more business owners to play in the property space, and given business owners make up a large percentage of the economy this will have a flow through effect to boost prices if they can make this easier and less prohibitive,”
“Having said that, the devil will be in the detail as there was not much depth as to how this policy will work in real time given during the budget delivery.”
Australia’s ageing population also got a mention.
“The government announced increased funding for Aged Care, but rather than moving our aging population to care facilities, the focus appears to be on ‘in-home’ packages by increasing them with 10,000 new packages rolling out,” says Porter.
“This approach will keep the elderly in their homes longer, and often these are family homes that are too large for them,”
“In turn, they are sitting on property stock that is better suited to growing families and this clogs up the property pipeline and puts greater strain on our lack of available stock and the housing supply for families. This will continue to put pressure on housing prices for that type of property in suburban areas around the capital cities,” concludes Porter.