Tax cuts and other measures tipped to help Housing

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Fast-tracked tax cuts for 11 million Australians, wage subsidies for young workers and business incentives underpin a big-spending federal budget aimed at creating jobs to drive Australia out of the coronavirus recession.

The building and housing industries expect the most important budget since World War II will boost confidence, construction and jobs.

REA’s executive manager of economic research Cameron Kusher said there was little specifically for the property market in the budget, which was all about getting people back to work and spending again.

“The real showcase of this year’s federal budget is about putting more money in people’s pockets with the hope they will spend it and getting people back to work,” Mr Kusher said.

The federal budget focused on getting people back to work and spending, with few housing-specific measures. Picture: Getty

The budget is full of coronavirus-driven records, notably a $213.7 billion deficit this financial year and net debt expected to peak at almost $1 trillion by 2023-24.

“This is a once-in-a-century shock that requires an unprecedented level of support across the economy,” the budget papers said.

There is $50 billion in tax relief for businesses and low-and middle-income earners and $98 billion in new spending as the government looks to kick-start activity in the private sector and create 950,000 jobs over four years.

“The Great Depression and two World Wars did not bring Australia to its knees, neither will COVID-19,” Treasurer Josh Frydenberg said.

Mr Frydenberg said the budget was all about jobs, while more than 11 million taxpayers will get a tax cut backdated to 1 July this year.

“Australians will have more of their own money to spend on what matters to them,” Mr Frydenberg said.

He said more than seven million Australians would receive tax relief of $2000 or more this year.

The key budget measures include:

• An additional $17.8 billion in personal income tax relief by bringing forward planned tax cuts;
• Tax relief for businesses totalling $26.7 billion;
• A JobMaker hiring credit to encourage businesses to hire younger Australians on JobSeeker;
• $1.2 billion to help businesses employ 100,000 new apprentices or trainees;
• Two new $250 payments for pensioners and other welfare recipients;
• Expansion of the First Home Loan Deposit Scheme, specifically for new builds;
• An additional $1 billion in low-cost finance to support the construction of affordable housing.

Tax cuts and an extension of a first-home buyer scheme are expected to help the housing market.

Mr Frydenberg said the budget would help thousands more Australians achieve home ownership and support thousands of jobs in the construction industry.

There were no announcements about extending HomeBuilder or the JobSeeker schemes, after the government said those decisions would be made after the budget.

Property industry expects a boost

While the industry did not get the big housing construction boom it would have liked, peak groups expected a confidence and jobs boost from the budget measures.

“Productivity-enhancing infrastructure, including local community infrastructure, wage subsidies and massive tax incentives for builders and tradies to invest means the government is putting in place the right foundation for recovery,” Master Builders Australia CEO Denita Wawn said.

Ms Wawn said the First Home Loan Deposit Scheme extension and affordable housing measure would extend the opportunity to own a home to thousands more people.

“It will unlock even more investment and further activate residential building as the engine of economic growth and employment.”

Real Estate Institute of Australia (REIA) President Adrian Kelly said the focus on creating jobs and generating re-employment through various budget measures was good news for the industry, tenants, investors, home owners and those wishing to sell.

“Bringing forward and backdating the stage two tax cuts will improve borrowing capacity and housing affordability,” Mr Kelly said.

Housing Industry Association managing director Graham Wolfe said the budget measures would deliver a pipeline of building work and help more people access a home of their own.

First-home buyer scheme expanded

The First Home Loan Deposit Scheme was expanded, but the additional 10,000 places only apply to the purchase of a new or newly-built home this financial year.

It came on top of existing arrangements for 10,000 eligible borrowers per financial year to buy a home with a deposit as low as 5%, with the government guaranteeing up to 15%.

The housing and building industries said the move, announced before budget day, would boost residential construction and support jobs.

COVID-19: The surge in first home buyer activity

But the REIA’s Mr Kelly said the budget was a lost opportunity in helping more Australians into their first homes.

“The First Home Loan Deposit Scheme should be extended to all eligible buyers of all homes, not just new builds,” he said.

Mr Kelly noted first-home buyers mainly purchased established dwellings, with less than 20% buying new homes.

About 20,000 Australians have accessed the scheme since it began in January 2020.

Source: Megan Neil - REA 7 Oct 2020