Property Praises Federal Budget Measures

Posted on 12/05/2017  
Property Praises Federal Budget Measures

The real estate industry has reacted positively to the Federal Budget. There has been widespread support for measures to improve affordability and encourage downsizers, as well as the planned investment in infrastructure, but criticism of moves to further target foreign investors.

Property Investment Professionals of Australia (PIPA) has welcomed the Federal Government’s “well-considered measures” to address housing supply and demand side issues.

Chair Ben Kingsley says PIPA supports the decision to continue “the sensible approach to negative gearing” and to retain capital gains tax discounts, which he says will stabilize the market and give confidence to people who invest in property to provide rental housing and financial security to their families.

But he says the elimination of some negative gearing deductions has the potential to create confusion among investors. “We are not completely happy with all aspects of this Budget, specifically in regard to travel costs and depreciation deduction changes,” Kingsley says.

Kingsley says that while the Budget supports infrastructure across the country, more investment is needed in transport to encourage affordable housing supply beyond the expensive inner-city areas.

Mirvac chief executive Susan Lloyd-Hurwitz, who is also president of the Property Council, says affordability is a “serious issue” in some parts of the housing market, and one of the main barriers for first-home buyers was saving for a deposit.

“We welcome measures which support people who are making regular contributions to savings in preparation for taking on regular home loan repayments,” she says. “It is important for people to demonstrate they can afford to service a loan and we are pleased to see them offered a hand up.”

The Housing Industry Association says the Budget focus on housing is an important step in addressing “the complex housing affordability challenge”.

“The Budget's housing focus sends important signals to state and local governments and the community that the Government is serious about meeting the challenge of delivering more affordable housing,” says Graham Wolfe, HIA Deputy Managing Director.

"There are no simple solutions, but providing well-targeted assistance to help first- home buyers save for a deposit and to providers of community housing through the National Housing Finance and Investment Corporation will make a difference.

"The incentives for downsizers will also help.

"Much of the work to improve housing affordability rests with state and local governments and the Federal Budget has made significant commitments to encourage action. The National Housing Infrastructure Facility has $1 billion behind it, which is more than just window dressing.

"Linking the National Housing and Homelessness Agreement's $1.8 billion to the states and local governments delivering improved housing supply and better planning systems is a significant and welcome reform.

"The 'city deals' expansion into smaller scale projects is also a welcome development: the big ticket projects are important but much can be achieved by removing obstacles to more efficient delivery of homes.”

However HIA is concerned about the negative impacts from the Budget's measures on foreign investment. The plans to tax vacant homes, limit the share of foreign buyers in new projects and lift foreign investor duties all send “exactly the wrong signal” to potential investors in Australia.

“Barriers to investment are not productive for the building industry or the economy more broadly,” Wolfe says. “Investment needs to be encouraged.”

Wolfe says the HIA will continue to urge the Government to undertake a thorough national inquiry into housing affordability (although Hotspotting would point out that there have been two federal parliamentary inquiries in recent years which have been unproductive).

Master Builders Australia says the Budget will boost the 340,000 builders and tradies across Australia. “There are more building and construction businesses than any other type in the economy and this Budget will boost their business success,” CEO Denita Wawn says.

“The Budget measures focus on the right parts of the economy at the right time, particularly areas of strength such as the building and construction sector, the nation’s second largest industry.

“The Government’s commitment to building more new homes and working with state and territory governments to remove barriers to increasing the housing supply will be positive in tackling the housing affordability challenge.”

Wawn says the housing affordability package - including financial incentives to state and territory governments to meet housing supply targets and the $1 billion to fund urban infrastructure to unlock more ‘shovel ready’ land for development - will help cut the hidden taxes, red tape and regulatory creep that drive up house prices.

“Master Builders welcomes the $1.5 billion Skilling Australians Fund and the additional training of 300,000 apprentices in partnership with state and territory governments.”

The Real Estate Institute of Australia (REIA) says the Budget has recognised the need to address housing supply and affordability.

“The boost to infrastructure spending, measures to improve housing supply, the extension of small business concessions, and the retention of the current negative gearing as well as CGT arrangements will help ensure that the property sector remains an important contributor to economic growth,” REIA President Malcolm Gunning says.

But he says the change in the threshold for foreign resident capital gains tax withholding to $750,000 - from the current $2 million - is not welcome. He called it simply “more red tape”, and not necessary.

“It could be considered misguided as most foreign investors buy higher valued properties in Sydney and Melbourne and to a lesser extent in Brisbane,” he says.

 

 

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