The Federal Government’s Treasurer Wayne Swan has recently released his much-anticipated annual budget report. The outline of 2013-14′s statement will likely impact on national consumer confidence, with voters keeping their eye on the looming election date in September. The government’s priority continues to be heavily focused on bringing the nation back into surplus which may spell out changes for the property industry – particularly if incentivising grants are dropped or taxes are raised. Today’s Belle Property blog addresses this year’s budget, and what it might mean for the Australian property sector.
There is an overarching sense of restraint to 2013-14′s federal budget. The optimism of years past has diminished as the golden glow of a surplus appears further away than promised. There are still some ‘sweeteners’ for property owners – most notably with the ‘Downsize Assistance’ package. ‘Downsize Assistance’ aims to encourage retirees to downsize their homes (if owned for 25 years or more) while keeping up to $200,000 for investment – without penalizing their pension payments. This will surely stimulate the purchase of units and apartments while also re-introducing to market the large established homes owned by mostly Baby Boomers and their parents. Winning all round!
The National Disability Insurance Scheme and the change in policy regarding the Baby Bonus are both big amendments to this year’s budget – but will they make a dent in the budget of keen property investors? Structural budget changes in the past have proven highly influential across Australian society. Consider the introduction of the Baby Bonus by the Howard government in 2002, which gave families the financial flexibility to increase the national average of 1.7 children per family to 2. These core societal developments are fostered or discouraged by national monetary policy.
In recent years the Australian property market has attracted many overseas investors – this enthusiasm may be somewhat reduced by plans to implement a 10 per cent withholding tax. This new tax protects the government from those who may flee overseas before paying capital gains tax when they sell their Australian property. To remedy these losses, international buyers will be asked to pay an additional ten percent levy when purchasing. Keep in mind that this tax only applies to properties over $2.5 million, and will therefore not have a major effect on the international buyer market.
While it is possible to analyse how the 2013-14 budget may influence the property market, no true influence will be discernable until full policy implementation (and spending) has occurred.