This year’s federal Budget hasn’t offered solutions to the housing affordability crisis, but there are still measures that buyers will appreciate.
While there were no changes to negative gearing, several policies even the playing field for first-home buyers and owner occupiers.
These measures won’t lead to major price drops.
But here are the policies that will have an impact on the housing sector.
1. How Budget 2017 helps buyers
Right now, it seems like investors get all the breaks in the housing market. They’re able to negatively gear property, obtain capital gains tax concessions and use their super.
Little wonder first-home buyers are frustrated. There was no change to negative gearing, but the First Home Super Scheme will make it easier to save for a deposit.
For owner occupiers looking to upgrade, the financial incentives offered to older Australians to downsize will assist in getting families into larger homes.
For investors, the lack of major changes offers financial certainty. Although there are many measures which will impact offshore buyers, local investors will be largely unaffected.
2. Taxing foreign buyers may backfire
There is no better way to improve affordability than increasing the level of supply.
A number of measures in the Budget will assist with this, including addressing planning and zoning reform, the release of defence land and the establishment of a National Housing Infrastructure Facility to ensure appropriate infrastructure is built when and where it’s required.
The measures overall are positive, but the increased taxes on foreign buyers may lead to lower levels of supply.
Increasing taxes to foreign buyers is a good way to raise tax revenue in the short-term, however many apartment developments require offshore buyers to get off the ground.
In cities like Sydney, where supply is a major issue, it could lead to less development.
3. Finally, something to increase the supply of social housing
Affording a home on an average income is tough enough, and for very low-income earners, the situation is particularly dire.
Over the past eight years, the supply of social housing has actually declined by 16,000 homes.
This Budget provides a lot of measures to address this problem. In particular, encouraging institutions to invest in social housing by providing a bond aggregator scheme, which will allow developers of social housing to access low-cost debt.