AFTER missing in action in previous budgets, property was one of the key themes of the 2017-18 Budget.
The key themes of Treasurer Scott Morrison’s budget were housing affordability and the crackdown on foreign investors.
The measures to address housing affordability include assisting first home buyers to build a deposit inside superannuation by allowing voluntary contributions of up to $15,000 per year and $30,000 in total per person, which will attract concessional tax treatment.
The government will also working with state and territory governments to reform Commonwealth funding arrangements under a new National Housing and Homelessness Agreement, and providing additional funding of $375 million over three years from 2018-19, to address homelessness.
The government will establish a $1 billion National Housing Infrastructure Facility to address infrastructure chokepoints that are impeding housing development in critical areas of undersupply.
Morrison also announced the establishment of the National Housing Finance and Investment Corporation to operate an affordable housing bond aggregator to provide cheaper and longer-term finance for the community housing sector.
The government will make minor tweaks to residential property deductions for investors, including disallowing travel deductions and limiting deductions for plant and equipment.
As for foreign investment, property developers will not be allowed more than 50% of a new development to offshore buyers.
Foreign investors will also be pay more taxes via capital gains tax and a new ghost levy for leaving their property unoccupied..
Overall the budget was welcomed by the property industry.
The Australian Property Institute (API) welcomed the focus on improving housing affordability.
“The Australian Property Institute welcomes the Federal Government’s focus on improving housing affordability in the 2017/18 budget,” API CEO Mike Zissler said.
“Housing affordability is an issue facing many Australians trying to buy their first home. It is an intricate matter that requires the communication and collaboration between all levels of government to be managed appropriately.
“We welcome the focus on increasing accessibility to the housing market by curtailing the cost of new housing supply and opening up opportunities for home buyers to obtain funding,” he added.
“Public and social housing measures introduced represent a necessary entry point to dealing with the issue of housing affordability.” Zissler said.
The Property Council of Australia’s CEO Ken Morrison said the budget has lived up to the hype of being a budget on property but he was critical of the foreign investment measures.
“The budget offers substantive policy solutions to many of the challenges facing home buyers and renters on low incomes.
“The focus on improving housing supply, keeping rental growth low and closing the deposit gap are all welcome, but the initiatives targeting foreigners will damage Australia’s reputation and will do nothing to help housing affordability.
“We have consistently said that you can’t change the trajectory of house prices in our cities without making progress on housing supply – and that means tackling blockages and providing non-distortionary incentives to invest in new supply.
“Our only disappointment with the budget is that the government has announced a range of measures aimed at punishing foreign investors. These seem designed to provide the government with a few good headlines but these measures will do nothing to improve housing affordability and potentially send a message about Australia’s openness to investment,” Morrison said.
HIA deputy managing director Graham Wolfe said the focus on housing will send important signals to state and local governments and the community that the government is serious about meet the challenge of delivering more affordable housing.
“There are no simple solutions but providing well targeted assistance to help first home buyers save for their first home and to providers of community housing through the ‘National Housing Finance and Investment Corporation’ will make a difference.
“Although not an affordability measure, the incentives for ‘downsizers’ will also help stimulate the supply of new housing more appropriate to the needs of our seniors.
“However HIA is concerned about the negative impacts on residential building from the budget’s measures on foreign investment.
“Plans to tax vacant homes, limit the share of foreign investment in new projects and increase 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; investment needs to be encouraged,” Wolfe said.
Meanwhile PowerHousing Australia, which represents 29 of Australia’s largest tier one community housing providers gave the thumbs up to the affordable housing measures.
CEO Nicholas Proud welcomed measures to support the homeless, first home buyers, investors and seniors.
“Encouraging the states and territories to transfer existing stock to the community housing sector results in social housing that is managed best practice, longer lasting with scale efficiencies.
“Our members are the ones who will deliver homes on the scale sought by the new $1 billion National Housing Finance and Investment Corporation which is being established to operate an affordable Bond Aggregator.
“However, the restructure of the National Affordable Housing Agreement (NAHA) does open up some questions.
“The recalibration of the NAHA promises to deliver a better return on federal investment, but it will require the states to play ball,”
“Community Housing Providers can build affordable homes at scale but we need to ensure the renegotiated NAHA doesn’t leave a funding gap when it comes to the weekly rental payments for struggling Aussies – such a gap would put shovel ready sites on hold in definitely.
“What this budget gets absolutely right is the broad suite of measures that attempt to create better housing outcomes right across the board,” Proud said.
Australian Property Journal