The Federal Budget 2011 – 12 – What does it mean for Real Estate?

The Federal Budget handed down by Treasurer Wayne Swan last week contained mixed news for the residential property market.  As a general review and I think many of my colleagues in the real estate industry would be in agreement, I would say that the budget somewhat ignored real estate and the industry issues that continue to need addressing. 

Referring to what I feel to be good news first, at least for property investors, the vendor tax and cuts to negative gearing on investment properties that were rumoured to be budget inclusions never eventuated.  This was a positive outcome, as if the Government had made it harder/less appealing for people to invest in property we could have had a situation where investors quickly sold, resulting in a significant reduction in the availability and affordability of rental housing.   

In terms of some of the key issues that Australia’s real estate industry currently faces including housing supply and affordability, the budget largely failed to implement any initiatives that would offer potential solutions for the industry – a disappointing result.   

In the budget papers, the Government acknowledged that they expect demand for housing in the medium term to be “supported by low unemployment, solid growth in household incomes, and past strength in population growth.” However, “ongoing supply constraints associated with planning and approval processes and land release restrictions are expected to continue to weigh on dwelling investment growth.”

Thus, the Government recognises that there are a series of issues that exist in the housing industry, however have not taken the budget as an opportunity to implement any practical solutions. 

According to CENTURY 21 Australia’s Chairman and Owner, Charles Tarbey whose response to the budget was featured in the Australian Financial Review last week, this budget brings no joy, particularly to low and middle income earners buying properties.   From his point of view, the Government is focusing too much on trying to achieve a surplus, and with house prices increasing, people in these earning brackets are not going to be able to afford housing. 

In last week’s media, Charles seems to have been joined by the majority of our industry colleagues who all appear to agree that the budget provides no incentive for the construction of affordable housing and that the removal of supply side obstacles and a reduction in property taxation are necessary measures just to begin to address the problem – none of which appear to have been directly addressed.   

So all in all, while containing some good news for investors, the budget was largely disappointing for the state of housing in Australia. Moving forward, I hope that the Government heeds the reactions of real estate industry leaders, and at least starts the process of instigating housing reform in the near term. 

Posted by Charles Tarbey on 17/05/2011 at 9:42 AM | Categories:

Comments

Write your comment





Leave this field empty: